State capitalism: a comparative study of National Oil Companies (NOCs) between Brazil and China

State capitalism, the statist planning in certain economic sectors, has generated several state-owned enterprises (SOEs) that represent a significant share of activity in the global market. Despite decades of liberalization and privatization in many countries, state ownership and state-led business activity remain widespread; yet new varieties of state capitalism have also emerged. Among these new varieties, state-controlled oil and natural gas entities, also known as nation oil companies (NOCs), represent a type of hybrid organization that specifically deserves scholars’ attention as they dominate the world’s oil & gas industry; yet many of the cases prove to be problematic. The emerging markets possess some of the most important NOC players, yet scant examination has been made to question their appropriateness. This paper presents a contextualized comparison between two NOCs that root in Brazil and China to illustrate how similar and different they are in terms of their ownership style, corporate governance characteristics, and the interactions they have with the host government. We analyzed the findings by matching them with the past theories that offer explanations on NOC performance variation. We concluded that first, regime type is not a dependable factor to indicate the actual state incentives to maintain NOCs, and the goals of state serve only as an equivocate factor in explaining the variation in NOC performances. Secondly, we speculated that due to the absence of a cohesive institutional logic and consistency, Brazil has a fragmented governance system that implies in inappropriateness of state capitalism. Thirdly, we discovered that the unique dynamics between informal and formal institutions in China may justify the better fitness of state capitalism when compared with Brazil. Certain limits to the research method and expectations on further inquiries are also developed