Does state capitalism matter in firm internationalization? Pace, rhythm, location choice, and product diversity
Abstract
Purpose
The purpose of this paper is to investigate the direct effects of state capitalism on the internationalization behavior of state-owned enterprises (SOEs). Specifically, the authors focus on four distinct aspects of internationalization behavior; namely, pace of internationalization, rhythm of internationalization, location choice (developing countries vs developed countries), and diversity of product lines.
Design/methodology/approach
The authors empirically test the hypotheses using data from Chinese construction companies during the period 2009-2015. The authors build a unique dataset by combining the data from ENR Top 225 International Contractors reports and the State Administration for Industry and Commerce of China information. Moreover, concerning the panel data structure and the potential for autocorrelation and heteroskedasticity, The authors use the feasible generalized least square panel model to test the hypotheses.
Findings
The authors find that the level of state capitalism has a positive effect on SOEs’ rhythm of internationalization, while there is no significant relationship between the level of state capitalism and the pace of internationalization. Furthermore, the authors find that the SOEs affiliated with higher levels of government organizations are more likely to locate business operations in developing countries and engage in more diversity of product lines.
Research limitations/implications
The findings show that the different varieties of state capitalism are the source of the different internationalization patterns of SOEs. Instead of supposing SOEs to be uniform players in emerging economies, the authors show that the nature of SOEs varies depending on the level of government with which they are affiliated, and this fact results from the divergent manifestations of state capitalism itself.
Originality/value
This study improves the understanding of how state capitalism affects the capabilities and motivations of SOEs in regard to overseas expansion. The authors extend institutional theory by supposing that the level of state capitalism has a positive effect on the rhythm of internationalization. Moreover, the authors find that SOEs embedded with high levels of government affiliation tend to enter into developing countries and diversify their product lines.
Keywords
Acknowledgements
The authors thank Patrick J. Murphy (editor) and two anonymous reviewers for their comments, which have improved the paper. The authors also thank Xuan Zhang and Xiaohua Meng for their insightful suggestions on previous versions of this manuscript. This study is supported by the National Natural Science Foundation of China (Grant Nos 71373161, 71390525).
Citation
Chen, H., Li, X., Zeng, S., Ma, H. and Lin, H. (2016), "Does state capitalism matter in firm internationalization? Pace, rhythm, location choice, and product diversity", Management Decision, Vol. 54 No. 6, pp. 1320-1342. https://doi.org/10.1108/MD-10-2015-0458
Publisher
:Emerald Group Publishing Limited
Copyright © 2016, Emerald Group Publishing Limited