Department of Computer, Control and Management Engineering

Research Summary: We investigate when and how a foreign multinational enterprise by acting as a relational co-owner helps the internationalization of hybrid state-owned enterprises. We merge the “liability of stateness” and the “government as strategist” perspectives with an institutional context-based approach. We claim that the effect of multinational enterprise relational co-ownership is contingent on the countries' institutional settings. It is positive at lower levels of both institutional coordination (as a measure of variety of capitalism) and government effectiveness. This effect is mitigated as coordination and government effectiveness increase. Further, a comparison between hybrid state-owned and private-owned enterprises shows that the magnitude of the contribution by foreign relational co-owners to internationalization is also moderated by institutional variables. Managerial Summary: Opportunities and challenges for state-owned enterprises (SOEs) to expand their activities abroad and to climb the rankings of the world-class multinational corporations have been emerging. However, these enterprises often lack the experience required for internationalization and suffer from the inward-looking orientation and political interferences of their national governments. This is especially true when governments are ineffective in getting things done, and the local institutions limit their role to sustaining a positive regulatory internal market, but with no strategy to promote multinational state-owned players. Under these conditions, the co-ownership with a foreign proactive industrial partner can be an effective strategy for SOEs to overcome the difficulties in entering foreign markets.