2023 Volume 22 Issue 3 Pages 59-70
According to Meyer, Ding, Li, and Zhang (2014), MNCs need to build up legitimacy in the host country to reduce the influence of institutional pressure. Compared to previous studies assuming that institutional pressures are homogeneous to all the MNCs, Meyer et al. (2014) assume that institutional pressure varies depending on the characteristics of the largest stockholder and the host country. They investigate how state-owned enterprises (SOEs), which tend to receive high institutional pressures, choose their establish mode and equity mode compared to privately owned enterprises (POEs). Using the subsidiary-level data of listed Chinese companies, they find that SOEs tend to choose greenfield establish mode and low control level compared to POEs, especially in the countries where institutional pressures are stronger for SOEs. Meyer et al. contribute to the studies by extending the understanding of SOEs and institutional theory. This paper provides a detailed explanation of the contents of Meyer et al. and provides some critical comments for Meyer et al.
