The emergence of marketized shareholders through corporate ownership reform and their impact on the foreign entry of emerging market firms is a critical but understudied issue. Our study investigates the effect of marketized state ownership on emerging market firms' propensity to engage in foreign direct investment. We argue that firms with marketized state ownership may derive institutional competitive advantages from their dual responsiveness to shifting global market conditions and home government expectations which has a positive impact on their foreign investment decisions. However, such advantages are likely to vary in magnitude for firms with marketized state ownership at central and local levels of government due to different patterns of corporate restructuring. We predict that such ownership effects are contingent on firms' affiliation to meso-level institutional structures such as state business groups which reallocate resources among members. Using a longitudinal sample of 973 Chinese publicly listed firms, we find empirical support for our arguments. Our research offers new insights on how emerging market multinationals may derive institutional advantages from pro-market reforms for overseas expansion.
- Corporate ownership reform
- Emerging market multinationals
- Institutional competitive advantages