Leadership Reconfiguration in State-Acquired Privately Owned Enterprises: A Paradox between Institutional Control and Agency

Abstract This study aims to explore the dynamics of leadership reconfiguration within emergent state-owned enterprises (SOEs), i.e., privately owned enterprises (POEs) that have been acquired by SOEs. From an institutional logic perspective, we argue that the emergence of these SOEs reflects a process in which POEs, previously dominated by market logic, incorporate state logic and transition to a hybrid form. However, this process presents a paradox for emergent SOEs: while a greater extent of reconfiguration of leadership helps them gain greater legitimacy in front of state-related institutional referents, it also results in greater conflicts between members adhering to different logics. To address this paradox, we theorize on the differences in the reconfigurations of the board and top management team (TMT) by respectively connecting their functions to institutional control and agency, two typical forms of institutional power. Our analysis reveals that emergent SOEs tend to experience reconfiguration more in the board while less in TMT. Furthermore, we find that these main effects are moderated by the industrial state-ownership density and acquirees' preacquisition political connections. Our study contributes to the SOE and M&A literature by highlighting the uniqueness of emergent SOEs arising from POE-to-SOE acquisitions. Additionally, we propose a strategy to reconcile legitimation and internal stabilizations during logic hybridizations, thereby contributing to the institutional logic literature.