Thanks But No Thanks: State-Owned Multinationals From Emerging Markets and Host Country Policies

Cuervo-Cazurra, A. 2018. Thanks but no thanks: State-owned multinationals from emerging markets and host country policies. Journal of International Business Policy, 1 (3–4): 128-156.

38 Pages Posted: 27 Dec 2018

See all articles by Alvaro Cuervo-Cazurra

Alvaro Cuervo-Cazurra

Northeastern University - Department of International Business and Strategy

Date Written: September 20, 2018

Abstract

I study the impact of the internationalization of state-owned companies from emerging markets on host country government policy. Whereas the literature commonly recommends that host country governments design policies to attract foreign direct investment, governments instead question or block investments by state-owned firms from emerging markets. I address this conflict between theory and practices by separating the causes of this behavior into six types depending on the characteristics of the firm (i.e., state ownership and emerging market origin) and the logic (i.e., economics, politics, and psychology). I suggest the development of ex-ante rule-based policies that provide clarity, address concerns, and support the benefits of inward investments, while limiting state capture by domestic interests. Thus, I explain how economic concerns over national security sectors and strategic technologies can be dealt with via exclusion, the political worries over opacity and weak governance can be addressed through monitoring, and the psychological anxieties of unfriendly governments and loss of relative status can be ameliorated using controls.

Keywords: state-owned firms, multinationals, policy, agency problems, strategic industries

JEL Classification: F13, F23, F52

Suggested Citation

Cuervo-Cazurra, Alvaro, Thanks But No Thanks: State-Owned Multinationals From Emerging Markets and Host Country Policies (September 20, 2018). Cuervo-Cazurra, A. 2018. Thanks but no thanks: State-owned multinationals from emerging markets and host country policies. Journal of International Business Policy, 1 (3–4): 128-156.. Available at SSRN: https://ssrn.com/abstract=3298226

Alvaro Cuervo-Cazurra (Contact Author)

Northeastern University - Department of International Business and Strategy ( email )

D'Amore-McKim School of Business
313 Hayden Hall, 360 Huntington Avenue
Boston, MA 02115
United States
16173736568 (Phone)
16173738628 (Fax)

HOME PAGE: http://cuervo-cazurra.com

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