The Benefits of Internationalization for State‐Owned Enterprises

Gabriel R.G. Benito · Asmund Rygh · Randi Lunnan

114 citations0/0 files storedGlobal Strategy Journal

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International Business and FDI Corporate Finance and Governance State Capitalism and Financial Governance

Abstract

Plain language summary We investigate whether listed state‐owned enterprises (SOEs) benefit more from internationalization than listed private enterprises. We argue that SOEs have a greater scope for benefitting from internationalization because of their previous domestic focus and because of government‐related firm‐specific advantages they can utilize for their internationalization. In listed SOEs, these factors may matter more than noneconomic objectives and corporate governance deficiencies that could reduce SOEs' economic benefits from internationalization. Empirical analysis on a sample of listed Norwegian firms provides modest support for the hypotheses. There is no indication that state ownership reduces the benefits of internationalization. Technical summary We consider state ownership as a moderator of the relationship between internationalization and performance in listed firms, developing theoretical arguments on the scope for benefits from internationalization, corporate governance, and government‐related firm‐specific advantages. We propose hypotheses on a positive moderation effect from state ownership overall and on more positive effects in majority state‐owned enterprises (SOEs) than in minority SOEs, on more positive effects in SOEs previously part of the government administration, and on more positive effects from market‐seeking internationalization than from efficiency or resource‐seeking internationalization. Panel data analyses considering listed Norwegian firms (2000 to 2010) provide modest support for the hypotheses. Copyright © 2016 Strategic Management Society.

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