How Much State Ownership Do Hybrid Firms Need for Better Performance?

Bach Nguyen, Hoa Do, Chau Le

Research output: Contribution to journalArticlepeer-review


Hybrid ownership – sharing partial business ownership with the state – is a new form of political connections that entrepreneurs in developing countries may employ to improve their access to key resources. This study investigates hybrid ownership as a strategic decision of entrepreneurs running small businesses in Vietnam – a transition economy. Utilising the resource dependence theory and legitimacy viewpoint, we propose and evidently show that increased state ownership in hybrid firms leads to improved performance. However, increasing state ownership beyond a minority share threshold harms firm performance due to the presence of agency costs. Also, the involvement of the state in firm governance reduces the benefits gained from having state ownership.
Original languageEnglish
JournalSmall Business Economics
Early online date28 Oct 2021
Publication statusE-pub ahead of print - 28 Oct 2021

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  • D02
  • Firm performance
  • Hybrid firms
  • M13
  • P23
  • Political connections
  • Vietnam
  • Weak institutions


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