Formal and informal influences of the state on OFDI of hybrid state-owned enterprises in China |
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| Institution: | 1. School of Business, The University of Queensland, Brisbane, Australia;2. Newcastle University Business School, Newcastle University, Newcastle, NE1 4SE, United Kingdom;3. Department of Finance, Accounting and Economics, Nottingham University Business School China, University of Nottingham Ningbo China;1. School of Economics, Renmin University of China, China;2. China Export & Credit Insurance Corporation, China;3. Sunway University, Malaysia;4. University of California, Davis, USA;5. School of Economics, Shandong University of Finance and Economics, China;1. Leeds University Business School, University of Leeds, Maurice Keyworth Building, Leeds LS2 9JT, United Kingdom;2. Grenoble Ecole de Management, Univ Grenoble Alpes ComUE, 12 rue Pierre Sémard, 38000 Grenoble, France;3. College of Business, KAIST (Korea Advanced Institute of Science and Technology), 335 Gwahangno, Yuseong-gu, Daehak-ro, Yuseong-gu, Daejeon 34141, Republic of Korea;1. DANCap Private Equity Chair and Departmental Chair at DAN Management, Western University, Ontario, Canada;2. Trinity College, Dublin, Ireland;3. NEOMA Business School, Reims Campus, France;4. Khalifa University, Abu Dhabi, United Arab Emirates;5. Aston University, United Kingdom;6. Griffith University, Australia;7. Sheffield University, United Kingdom;1. School of Management, Zhejiang University, Hangzhou, 310058, China;2. Cardiff University Business School, Aberconway Building, Colum Drive, Cardiff, CF10 3EU, United Kingdom;3. Leeds University Business School, Maurice Keyworth Building, University of Leeds, Leeds, West Yorkshire, LS2 9JT, United Kingdom |
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| Abstract: | This study investigates how the state influences the outward foreign direct investment (OFDI) of hybrid state-owned enterprises (SOEs) in China. Previous studies have provided conflicting arguments and empirical findings on the internationalization of SOEs, with some studies proposing a positive relationship between state ownership and OFDI, while others propose a negative relationship. In this paper, we argue that the mixed effects are due to different influences of different levels of state ownership and different types of political connections. We investigate our proposed hypotheses based on a sample of publicly listed hybrid Chinese SOEs between 2009 and 2016. We find an S-shaped relationship between state ownership and OFDI such that at low levels of state ownership, OFDI increases as state ownership increases; at medium levels of state ownership, OFDI decreases as state ownership increases; at high levels of state ownership, OFDI increases again as state ownership increases. We further find that executive-branch political connections between boards and top management teams of firms and the government have a negative effect on OFDI, while legislative-branch political connections have no significant effect on OFDI. |
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| Keywords: | State-owned enterprises Foreign direct investment Top management teams Board members China |
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