Purpose The purpose of this study is to examine the impact of collective decision-making on the strategic expansion of state-owned enterprises (SOEs) from an institutional knowledge management perspective, providing new empirical evidence for the strategic theory and practice of SOEs within specific cultural contexts. Design/methodology/approach The authors identify the “Three Importances and One Greatness"(TIOG) system as an exogenous shock, constructing a quasi-natural experiment to test our hypotheses. This policy was established for SOEs by China’s State Council in July 2010. Findings The DID results indicate that this collective policy significantly curbed the strategic aggressiveness of SOEs. The reduction was approximately 2.2% on average compared to pre-policy levels. An examination of the mechanisms reveals that the policy reduces strategic aggressiveness by increasing managerial risk aversion and diminishing the board’s decision-making motivation. Heterogeneity analyses show this reductive effect is not uniform. SOEs possessing a younger board composition and elevated market power demonstrate a higher sensitivity to this policy. The policy incentives are more acute for firms holding fewer outstanding shares or maintaining a lower ratio of directors appointed by controlling shareholders. Originality/value This study reveals how collective decision-making influences strategic choices in SOEs through institutional knowledge management. It offers a novel research perspective for addressing agency problems within SOEs and expands the boundaries of research into the economic consequences of collective decision-making.
Yang et al. (Thu,) studied this question.