The state is back: state capitalism and private firms

Three of the five largest companies in the 2018 Fortune Global 500 were Chinese state-owned enterprises (Alami and Dixon, 2020, p. 71). Commentators call all this state capitalism. Suppose you run a private firm about to bid against, supply or partner with a company that has the state behind it. What does the label tell you? This post reads the review by Alami and Dixon (2020) for an answer, and says where it gives none.

What does state capitalism mean?

It has no single meaning. Alami and Dixon write that the term lacks a unified definition and refers to an extremely wide array of policy instruments, institutional forms and networks that involve the state to different degrees (Alami and Dixon, 2020, p. 71). They sort the uses into three bodies of research, each with its own object.

Their verdict is blunt. The concept, they say, "describes much, but explains nothing", and "at this stage, the analytical value of the concept is weak" (Alami and Dixon, 2020, pp. 71-72). They do not argue for discarding it; they want it tightened (Alami and Dixon, 2020, p. 72). As I read it, "this rival is state capitalist" therefore tells you little about how the rival decides. You have to ask the next question: which meaning?

Meaning one: how does a firm with state-held capital compete?

In strategic management research the term refers to firms where the state plays a strategic role through ownership or control of capital (Alami and Dixon, 2020, p. 72). The state may hold a majority or minority stake, or work through holding companies, sovereign funds, state-controlled pension funds or development banks (Alami and Dixon, 2020, p. 73). The same list has an entry that matters to private firms: subsidised credit for private companies, and help with mergers and acquisitions in strategic sectors (Alami and Dixon, 2020, p. 73). A state-backed rival is not necessarily a state-owned one.

In September 2016 Reuters reported that Baosteel would acquire its smaller, debt-laden rival Wuhan Iron and Steel, creating the world's second-largest steelmaker. Both were state-owned. The plan was part of Beijing's push to consolidate a fragmented steel industry and cut excess capacity, and it still needed government approval (Reuters, 2016). An analyst at CRU said the deal would not necessarily lead to capacity cuts (Reuters, 2016). Placing this case under meaning one is my classification, and I have not checked what happened after 2016.

On efficiency, the conventional management literature predicts that state-owned firms will underperform private ones under almost any circumstance, because of political interference (Alami and Dixon, 2020, p. 73). The newer work treats the many state-owned firms that do as well or better as a puzzle (Alami and Dixon, 2020, p. 73). Alami and Dixon fault it for tending to assume that officials' influence is interference. That assumption leaves no room for a firm that is efficient and also serves the state's strategic interests (Alami and Dixon, 2020, p. 74). My inference: do not build a competitive plan on the assumption that a state-linked rival is slow.

Meaning two: how are state and business tied together?

In comparative capitalism the term names a national variety, and the question is how state–business relations are organised. The authors look at how far the state intervenes, at the form of state–business ties (policy networks, business associations, deliberation councils, personal relationships) and at the type of state: developmental, predatory, regulatory or welfare (Alami and Dixon, 2020, p. 76).

Country lists change with the author. Carney and Witt (2014) put Malaysia, Thailand, China and India on the more developmental side and Vietnam, the Philippines, Laos and Indonesia on the more predatory side, within one state-led type (Alami and Dixon, 2020, p. 76). Witt and colleagues (2018) reject the idea that these countries share a variety; Alami and Dixon sum the position up as "strong capitalist states everywhere, state capitalism nowhere" (Alami and Dixon, 2020, pp. 76, 78). Alami and Dixon add that a small change in the measures can move an economy in or out of the group (Alami and Dixon, 2020, p. 78).

My reading: a country label for Vietnam depends on author and method, so it cannot decide a contract. The charter, ownership structure and decision-makers of the actual counterparty can.

Meaning three: the state as investor and as actor abroad

One theme in global political economy is the state as a source of patient capital. After the 2008 crisis, Asian and Middle Eastern sovereign funds helped recapitalise distressed banks and carmakers in the West (Alami and Dixon, 2020, p. 79). For a private firm, the state here may be an investor and not only a rival.

A state investor need not control the company. Norway's sovereign fund is an example. At the end of 2025 it was worth NOK 21,268 billion, was invested in 7,201 companies and held on average 1.5% of the world's listed companies. Apart from listed real estate companies, it may not hold more than 10% of the voting shares in any one company (Norges Bank Investment Management, 2025).

When the state goes abroad, does it go for statecraft or for profit? On national oil companies, Alami and Dixon report three views: tools of state power, commercially minded firms that governments follow, or a hybrid pattern (Alami and Dixon, 2020, pp. 80-81). De Graaff and van Apeldoorn (2018) say Chinese energy state firms follow commercial principles abroad but keep a state-owned company's duties at home, such as energy security and social stability (Alami and Dixon, 2020, p. 81). As I read it, a partner of that kind might bargain like a commercial firm today and follow the state's priorities tomorrow. The sources I read do not say how often that happens.

Is a strong state the last word?

Doner (1992) argues against that. According to the abstract, he starts from growth analyses that draw on East Asia's newly industrialising countries to credit cohesive, autonomous states with solving market failures. Then, through car manufacturing in five countries in Southeast and Northeast Asia, he identifies collective action problems and explores the limits of what even strong states can do about them, and he stresses the role of private sectors and joint public–private institutions (Doner, 1992). See also strong-state and institutionalist views. The abstract does not use the phrase state capitalism. My inference: for a firm, the question about the state should come with a question about whether the private side can organise itself.

An invented example: company A and holding company B

Suppose A is a packaging plant in Binh Duong with 150 workers. Holding company B, in which the state holds a large stake, invites A to quote for a three-year contract. A's competitor C has just received a subsidised loan from a development bank. The whole example is invented by me; the letters do not point to real firms.

This suits A if it has a few weeks for due diligence before quoting. It does not suit a decision that must be made in days; then clear payment terms and a written loss limit matter more than a map of concepts. The four questions are my inference from how the sources split the term, not checked against data on Vietnamese firms.

If A went abroad, the problem would flip. According to the abstract of Moschieri, Ravasi and Huy (2024), the prevailing view is that local partners in joint ventures shelter multinationals from abuse by political authorities. Their multiple-case study of alleged expropriations brought before the World Bank finds that relying mainly on local partners can create a liability of insidership: too few ties to other stakeholders, so the firm is slow to notice and answer hostility (Moschieri et al., 2024). That is a study of host-government hostility; the abstract says nothing about state-owned partners.

Going deeper: what I read and what I did not

I read Alami and Dixon (2020) in full, through an archived Wayback Machine copy of the publisher's PDF because the SAGE page blocks automated access. It is a review with a viewpoint: the authors work from critical political economy and say plainly that they doubt the term's value (Alami and Dixon, 2020, p. 72). Everything here about Carney and Witt, Witt and colleagues, Meckling, and De Graaff and van Apeldoorn is as Alami and Dixon report it; I have not opened the original studies. They suggest that the concept of state–capital hybrids may be more useful than the broad term; they define it as the concrete political forms that mediate the relation between state and capital (Alami and Dixon, 2020, pp. 85, 90).

For Doner (1992) and for Moschieri and colleagues (2024) I read only the abstracts, taken from public databases, so I do not know the detail of their arguments. No source in this post measures how Vietnamese private firms fare when they compete or partner with state-linked firms.