State dominance over the market: Reexamining the survival of China’s state-owned enterprises

State-owned enterprises (SOEs) and their liabilities have been extensively examined in the literature. However, less attention has been paid to how SOEs overcome such liabilities and even flourish in a market transition from a centrally planned economy to a market-based one. This study explores how China’s SOEs continue to thrive in a system where state and market logics co-exist. The state appears to arrange an institutional field favoring SOEs, which are likely to transact and interact with co-located market-based firms, from which they acquire market logic elements through knowledge spillover. Three different market-based forms—previous SOEs that have been privatized, new privately owned enterprises, and foreign-owned enterprises—enhance the survival chances of SOEs. Each market-based form is established for different reasons and operate through different processes, incorporating market logic elements and developing the ease of communication that affect how SOEs obtain market logic elements. Furthermore, government affiliation and industry structure generate different levels of support and demands for SOEs, and thus not all SOEs benefit equally from obtaining market logic elements.