Agents of the state or market? A mutual institutional constraint framework of Chinese Central SOEs’ OFDI

Chinese Central state-owned enterprises (CSOEs) have become active global investors. This requires extensions of existing theories since CSOEs sit across international business and political economy. This paper develops a mutual institutional constraint framework (MICF) to explore whether CSOEs are the agents of the state or market while internationalizing. MICF has identified ‘three level actors’: the state, the enterprises, and the top executives; illustrated ‘three forces’ embedded in all actors: capabilities, responsibilities and incentives; and resulted ‘three manifestations’: conservatives, entrepreneurs, and opportunists of CSOEs’ internationalization. Two case studies are conducted between 2011 and 2013, providing supporting evidence to MICF. Six propositions are developed for further investigations. CSOEs’ internationalization has shown characteristics of a mixture of practices as agents of state and market. The ‘three level actors’ are mutually constrained by various forces in the state-centred and non-state-centred home institutional environment in China. It’s also of the interests to explore if this framework can be used to explain other ownership firms in China or state-owned firms’ OFDI from other developing countries.