Home-country government support, the belt and road initiative, and the foreign performance of Chinese state-owned subsid
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Home-country government support, the belt and road initiative, and the foreign performance of Chinese state-owned subsidiaries Yuanyuan Huang 1 & Lu Shen 2 & Chuang Zhang 3 Accepted: 10 October 2020/ # Springer Science+Business Media, LLC, part of Springer Nature 2020
Abstract State-owned (SO) multinational enterprises (MNEs) from emerging economies face two contradictory effects on their foreign operations due to their linkage with their home-country governments. Although home governments provide SO MNEs with resources, the affiliation also exposes SO MNEs to the legitimacy challenges in the host countries. Given this theoretical debate, we propose that home government support may facilitate SO MNEs’ post-entry operations in the host markets. Furthermore, because the legitimacy pressures directed at SO MNEs may be contingent on the interstate relations between the host and home governments facilitated by China’s Belt and Road Initiative (BRI), the BRI cooperative relations may shift the effect of home government support. Using survey and archival data, we find that home government support has a positive impact on the foreign performance of SO subsidiaries. This effect is weaker in countries that are cooperating with the BRI than in those that are not. Moreover, institutional distance weakens the negative interactive effect between BRI cooperation and home government support on the performance of SO MNEs’ foreign subsidiaries. These findings extend the institutional perspective by highlighting an alternative source of legitimacy for MNEs with distinctive attributes and in various host conditions. Keywords Home government support . Belt and road initiative (BRI) . Institutional
distance . State-owned subsidiary . Institutional theory
* Chuang Zhang [email protected] Yuanyuan Huang [email protected] Lu Shen [email protected] Extended author information available on the last page of the article
Y. Y. Huang et al.
The international presence of state-owned (SO) multinational enterprises (MNEs) from emerging economies (EE) has increased rapidly in recent years (Clegg, Voss, & Tardios, 2018; Cuervo-Cazurra, Inkpen, Musacchio, & Ramaswamy, 2014; Estrin, Meyer, Nielsen, & Nielsen, 2016). Scholars argue that the governments of EE play a vital role in SO MNEs’ overseas activities (Li, Cui, & Lu, 2014; Luo, Xue, & Han, 2010; Wang, Hong, Kafouros, & Wright, 2012), but their views are inconclusive. One stream of research emphasizes that their affiliation with the home-country government allows SO MNEs to enjoy privileges and resource support from their parent government. Such support motivates them to expand abroad and enables them to compete with local firms in the host countries (Gaur, Ma, & Ding, 2018; Han, Liu, Xia, & Gao, 2018; Lu et al., 2014). In contrast, other studies propose that this government association and support cause SO MNEs to face severe legitimacy challenges in the host countries, which enhances their liability of foreignness, impedes them from gaining access to local resources, and makes
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