A Geopolitical Perspective into the Opposition to Globalizing State-Owned Enterprises in Target States

Abstract

Existing studies on multinational enterprise (MNE) location strategy assume that MNEs are focused on economic not political objectives. The emergence of globalizing state-owned enterprises (SOEs) requires us to revisit such an assumption because SOEs symbolize national interests of their home states and are perceived as political entities by target states. This paper provides a geopolitical perspective into how geographic distance, religious similarity, and political regime similarity between two nation states, as well as resource complementarity between globalizing SOEs and target states, explain the level of opposition that globalizing SOEs face in target states, which in turn affect their abilities to exploit locational advantages globally. We also investigate how the salience of nationalist politics moderates the influence of these geopolitical factors on the level of opposition that globalizing SOEs face. Although our geopolitical model focuses on globalizing SOEs, this model may shed new light on understanding the role of geopolitics in affecting private MNEs’ location choices.

Keywords: Location strategy, state-owned enterprises, geopolitics, multinational enterprises, international business, international politics

JEL Classification: F20