Governments as Owners: State-Owned Multinational Companies

Abstract

We explain how the analysis of state-owned multinational companies (SOMNCs) can help extend the literature in two ways. First, we cross-fertilize the international business (IB) and state-owned enterprise (SOE) literatures in their analysis of foreign investment behavior and introduce two arguments: the extraterritoriality argument, which helps explain how the multinational company (MNC) dimension of SOMNCs extends the state-owned enterprise (SOE) literature, and the non-business internationalization argument, which helps explain how the SOE dimension of SOMNCs can extend the IB literature. Second, we analyze how the study of SOMNCs can help develop arguments that extend five theories of firm behavior: the triple agency conflict argument in agency theory, the owner risk argument in transaction costs economics, the advantage and disadvantage of ownership argument in the resource-based view, the power escape argument in resource dependence theory, and the illegitimate ownership argument in neo-institutional theory.

Keywords: State ownership, multinational companies, firm objectives, internationalization

JEL Classification: F23, M16, M21