Institutional traction: how state owned enterprises can harness their position from their institutional context?

Abstract

State owned enterprises (SOEs) have been conceived of across economies as commercial enterprises with liability of redistribution. They also have legitimacy as organizations as a “carrier of many concerns”, whose owners are the citizens of the state. In this paper, we try to address the question of how SOEs can derive and harness legitimacy in a way that makes redistribution less costly. We put forward the concept of institutional traction and define it thus: Institutional traction is the position that a state owned enterprise (SOE) derives from its institutional context, because of its historical as well as current standing. This position is associated with potential advantages. We develop the antecedents of institutional traction in this paper. We also explore how top management teams of SOEs can utilize institutional traction to create resources and advantages for SOEs.