The Differential Effects of Minority State Ownership Types on the Internationalization of Emerging Market Multinationals from Democratic States

We argue that governments use different types of minority state ownership in domestic multinationals to balance the provision of public and private goods and maximize political survival in emerging market democracies. Using a sample of Brazilian multinationals, we combine instrumental and fixed-effects regressions with an in-depth case study in order to measure and describe the effects of two types of ownership ties. We show that ownership through state-controlled institutional investors has a positive effect on the internationalization level of multinationals, whereas the ownership by state agencies and state-owned enterprises shows an opposite effect. By looking at these effects from the perspective of the political survival of democratic rulers, we contrast our results against the empirical research on multinationals from authoritarian states.