State Control’s Effects on Firms’ FDI Entry Decisions: A Study of Chinese Firm’s Outward Investments

State-owned enterprises (SOEs) are subject to different influences from host countries and the home country compared to privately owned enterprises (POEs). We examined how these effects shape SOEs’ entry (Wholly Owned Subsidiary vs. Joint Venture) and establishment (Greenfield vs. Acquisition) mode decisions. We theorize that host country and home country effects may shape a distinct preference for wholly-owned subsidiaries and greenfield entry among SOEs. Furthermore, we theorize that the specificities of SOEs and of the host country constraints they face change their rates of learning – i.e., their reactions to experience with each entry mode and establishment mode – relative to POEs. Empirically, we examine entry decisions by SOEs and POEs from a prominent emerging economy, China. We show that using an instrumental variable method to account for the endogeneity of state-owned status makes a difference in the main effects. We find support for our predictions regarding differential experience effect magnitudes for SOEs. These findings extend the studies on how state ownership affects firms’ foreign investment strategies, as well as the theoretical and empirical understanding of state-owned status.