Communist Ideological Imprinting and the Transformation of State‐owned Enterprises
| Published date | 01 April 2023 |
| Author | Liang Zhang,Yeyao Ren,Jianzu Wu |
| Date | 01 April 2023 |
| DOI | http://doi.org/10.1111/1467-8551.12632 |
British Journal of Management, Vol. 34, 1062–1078 (2023)
DOI: 10.1111/1467-8551.12632
Communist Ideological Imprinting and the
Transformation of State-owned Enterprises
Liang Zhang ,1Ye y a o Re n 2,3 andJianzuWu
4
1Business School, Central South University, Changsha, Hunan, China, 2Xi’an Jiaotong University, Xi’an,
Shaanxi, China, 3College of Business, City University of Hong Kong, Hong Kong, Hong Kong, and 4School of
Management, Lanzhou University, Lanzhou, Gansu, China
Corresponding author email: 18294413280@163.com
Despite an increasingly similar institutional environment for state-owned enterprises
(SOEs), some SOEs adapt to transformation more rapidly than others. Weseek answers
to this puzzle by examining how founding institutional environments shapethe timing of
SOE transformation. We rst employ imprinting theory to argue that SOEs founded in
different environmentsare imprinted with different political ideologies that inuence their
subsequent transformation timing. Using a dataset from the Annual Census of Chinese
Industrial Enterprises from 1998 to 2007, we nd that SOEs’ communist ideological im-
print negativelyaffects their faster transformation. Drawing on insights from institutional
theory, we also consider the contextual factors that inuence the strength and decay of
the imprint. We nd that SOEs afliated with central government at foundingdevelop a
stronger imprint, but mimetic forceand regional marketization in the current environment
weaken the negative effect of the imprint on faster SOE transformation. We discuss the
contributions to the literature on SOE transformation and imprinting and the researchat
the intersection of imprinting and institutional theory.
Introduction
In recent decades, many emerging economies (e.g.
China, India and Vietnam) have undergone ex-
tensive pro-market reforms, transitioning from a
government-led economy to a market-based one
(Cuervo-Cazurra, Gaur and Singh, 2019; Park, Li
and David, 2006). Traditionally, state-owned en-
terprises (SOEs) are considered as inefcient and
unable to adapt. Government policies have been
introduced in emerging economies to trigger the
transformation of such enterprises (Genin, Tan
and Song, 2020; Liu, Sun and Woo, 2006), with
the response of SOEs inuenced by the institu-
tional environment in which they are embedded.
For instance, previous studies indicate that gov-
ernment reform policies (Erakovic and Wilson,
2005), institutional positions (Jing and Benner,
2016), market liberalization (Radi´
c, Ravasi and
Munir, 2021), market competition (Tong, 2009),
and industry deregulation (Raynard, Lu and Jing,
2020) are just some of the factors that drive SOE
reform.
However, little is known about why transforma-
tion in response to government policies by some
SOEs is rapid while for others it is not. This is
particularly puzzling given that contemporary in-
stitutional environments surrounding SOEs (e.g.
the driving factors outlined above) have become
increasingly similar as a result of pro-market re-
form. Recent research suggests that, to date, stud-
ies have focused on how‘organizations’ currenten-
vironments’shape their changes, overlooking the
impact of ‘past institutional environments’ (Cardi-
nale, 2018; Waeger and Weber, 2019, p. 337). SOE
transformation requires the abandonment of pre-
existing ‘ownership structure and related manage-
rial systems’ (Jing and McDermott, 2013, p. 54)
and the adoption of new ‘Western-style’ gover-
nance mechanisms (Aivazian, Ge and Qiu, 2005,
p. 791). Thus, this relative lack of attention to
organizations’ past environments is problematic
© 2022 British Academy of Management.
Organizational Imprinting and SOE Transformation 1063
and striking, particularly when viewedthrough the
lens of imprinting theory, which indicates that or-
ganizations’ pre-existing structures, routines and
capabilities are imprinted by past environments
and can fundamentally affect their current ac-
tions (Marquis and Huang, 2010; Marquis and
Tilcsik, 2013).
To ll this research gap, we focus on how
the institutional environment at the time of
an SOE’s founding inuences the timing of its
transformation. We rst use imprinting theory to
examine the long-lasting impact of SOEs’ found-
ing environments (Marquis and Tilcsik, 2013;
Stinchcombe, 1965), positing that SOEs founded
in different institutional environments are im-
printed with different political ideologies (John-
son, 2007). Such ideological imprints shape SOEs’
capacity to change (Kriauciunas and Kale, 2006)
and their members’ attitudes towards the transfor-
mation decision (Gupta, Briscoe and Hambrick,
2017), creating variationin transformation timing.
Furthermore, we draw on institutional theory
to understand how organizational legitimacy con-
siderations shape the strength and decay of the
imprint by examining contextual factors. We ar-
gue that SOEs’ characteristics atfounding increase
their susceptibility and receptiveness to the found-
ing environment, which will intensify the strength
of the imprint. Moreover, incompatibilitybetween
the imprint and current institutional environments
may lead to organizational legitimacy loss, which
decreases the advantage of the imprint, thus weak-
ening its inuence.
We test our theory in China, where a large-scale
transformation of SOEs took place between 1998
and 2007. The timing of the transformation var-
ied widely across SOEs (Jefferson and Su, 2006).
Specically,we focus on the impact of the commu-
nist ideological imprint. We nd that SOEs with
a strong communist ideological imprint—that is,
founded during the Chairman Mao era—require
more time to complete their transformation. This
imprinting effect is stronger for SOEs afliated
with the central government at founding. How-
ever, the imprint decays when SOEs operate in an
industry where numerous peers are engaged
in transformation or are located in a highly
marketized region.
Our study thus makes several contributions.
First, we extend the SOE transformation litera-
ture (Jing and Benner, 2016; Radi´
c, Ravasi and
Munir, 2021) by revealing the persistent impact
of founding institutional environments on SOE
transformation timing. In doing so, this study
helps to resolve the puzzle of why some SOEs
adapt quickly to reform but others do not. Sec-
ond, we advance the imprinting literatureby intro-
ducing the idea of organizational ideological im-
printing, indicating that an institutional imprint
can manifest in an organization’s political ideol-
ogy. In contrast to prior research that treats the
imprinting process as a ‘black box’ (Simsek, Fox
and Heavey, 2015, p. 305), we further examine the
strength and decay of organization-level imprints.
Third, we contribute to the research at the in-
tersection of imprinting and institutional theory
by documenting the combined effect of founding
and current institutional environments on orga-
nizational actions (Cardinale, 2018; Waeger and
Weber, 2019).
Theoretical background and hypotheses
Organizational imprinting
Imprinting is dened as ‘a process whereby, dur-
ing a brief period of susceptibility, a focal entity
develops characteristics that reect prominentfea-
tures of the environment, and these characteristics
continue to persist despite signicant environmen-
tal changes in subsequent periods’ (Marquis and
Tilcsik, 2013, p. 201). The typical period in which
organizations are susceptible is atthe time of their
founding, when they are more receptive to envi-
ronmental inuences as they attempt to achieve
a good t with their environment to reduce un-
certainty (Shirodkar, Konara and McGuire, 2017;
Stinchcombe, 1965). Founding institutional envi-
ronments, involving formal (rules and laws) or in-
formal (beliefs and norms) constraints, explicitly
or implicitly delineate organizations’ behavioural
boundaries (North, 1990; Peng, 2003) and thus
constitute a key source of imprints (Maksimov,
Wang and Luo, 2017). When organizations adapt
to external pressures and attempt to reduce un-
certainty, prominent features of institutional en-
vironments (e.g. public policy and political ide-
ology at founding) are likely to be internalized
and rooted in organizational structures (Johnson,
2007), cultural templates (Marquis and Huang,
2010) and knowledge and capabilities (Kriauciu-
nas and Kale, 2006).
However, few studies explore the formative and
evolutionary processes of organizational imprints.
© 2022 British Academy of Management.
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