How the corporate governance of state owners of enterprises affects elite, economic, and political development in emerging economies

Student thesis: Doctoral ThesisDoctor of Philosophy


My thesis is that the corporate governance of state owners of enterprises affects development in emerging economies. The research consists of three sequential studies, investigating state owners’ potential effects on elite, economic, and political development. The studies are motivated by limited research focused on state owners, within administrations, relative to either their political regime masters or to the enterprises they own. Despite prevalent state ownership in emerging economies and new state owners including sovereign wealth funds, limited academic research leaves international policy organisation views to be empirically tested. I examine variation in the corporate governance of state owners: how ownership evolves, how ownership relates to enterprise executive politicisation, and how politicisation relates to enterprise performance trends. The thesis builds on literature in political economy, post-communist politics, and corporate governance.
The first empirical chapter studies state ownership evolution, in emerging economies representing around half of emerging economy land, population, GDP, and stock markets. The results show initial agency, as ownership changes from traditional ‘decentralised’ sector ministries to either fragmented ‘dual’ ownership by varied state owners or to ‘central’ ownership largely under one body. However, this initial agency is followed by structure: no further ownership category changes. The main dual or central owner is led by someone, whose authority is found to evolve and in opposite ways, depending on whether ownership became dual or central. Therefore, initial agency leads via path-dependent structured evolution to distinct owner-authority equilibria. These distinct governance equilibria have potential political development consequences.
The second empirical chapter investigates in depth two of the emerging economy cases, those with the most similar systems except for different governance equilibria, to compare their state-owned enterprise executive politicisation. Based on biographical analysis of supervisory board chair and management board CEO ‘executives’, it finds a significantly different prevalence of political ties. Weak governance exposes enterprises to principal-agent problems via politicisation, to which strong governance offers a collective action solution. Such divergent executive politicisation has potential social development consequences.
The third empirical chapter questions literature relating executive political ties to enterprise performance, where nonmarket strategy literature sees ties as resources while political economy often sees ties as corruption. In one case, enterprises whose executives have evident political ties, ‘political executives’, appear to perform as well as enterprises led by ‘technocrats’. However, this is due to reverse causality: high performing enterprises appoint more political executives, while low performers appoint more technocrats, suggesting patronage versus challenges. Once in office, technocrats are associated with positive and political executives with negative performance trends. Politicisation is negative for performance while performance is positive for politicisation. Divergent performance trends have potential economic development consequences.
The three studies each contribute individually to associated literature, in political economy, post-communist politics, and corporate governance. Together, they answer the research question via a causality chain: governance evolves to distinct equilibria; associated with significantly different executive politicisation; associated with significantly different enterprise performance trends. The final chapter discusses how these findings may inform views of development in emerging economies. One path helps lock in non-development: fragmented owners led with weak authority, high executive politicisation in what New Institutional Economics describes as a limited access order, and political ties appearing to be a resource as nonmarket strategy literature suggests but in fact impacting performance trends. Despite nondevelopment, it is a viable regime survival strategy, based on maximising rents. I argue that the other path – central owners led with stronger authority, a more open access order for enterprise executives, and stronger enterprise performance trends – is an alternative regime survival strategy based on popularity and elite expectations, and is a policy for state ownership more conducive to elite, economic, and political development.
Date of Award1 Nov 2021
Original languageEnglish
Awarding Institution
  • King's College London
SupervisorSam Greene (Supervisor) & Gerhard Schnyder (Supervisor)

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