State-owned Enterprises in the global market: Varieties of government control and internationalization strategies

We study the internationalization of State-owned Enterprises (SOEs) in the 21st century and its underlying firm-level and country-level drivers. Using a global database of more than 110,000 M&A (10% having a state-owned acquirer), we empirically investigate differences between private enterprises, traditional SOEs and contemporary reformed SOEs. We show that the intensity of government control is associated with diverging targeting strategies and internationalization patterns. Compared to traditional SOEs, reformed SOEs are more outward-oriented, tend to purchase better performing targets, concentrate their investments towards less risky countries that are geographically and culturally closer, with better institutional quality and a more central position in the trade network. Our findings are consistent with the view that reformed SOEs are increasingly adopting market-oriented strategies thus diverging from traditional SOEs (and converging towards the private model) in their objective functions.