State-owned enterprise

legal entity controlled by a government to undertake commercial activities

A state-owned enterprise (SOE) is a government owned organisation which is started or nationalised by a government.

This may be to

  • earn profit for the government,
  • control a monopoly,
  • provide products and services to citizens at a lower price,
  • implement government policies,
  • deliver products & services to the remote parts of the country.

The national or provincial government has majority ownership over these state owned enterprises. They are also known as public sector undertakings in some countries.[1] They have distinct legal forms. The government defines what they should do. (e.g., a state railway company may aim to make transportation more accessible and earn profit for the government).[2]

They are common with natural monopolies.

In both Eastern Europe and Western Europe, there was a massive nationalization throughout the 20th century, especially after World War II. In the Eastern Bloc, countries adopted very similar policies and models to the USSR. Governments in Western Europe saw state intervention as necessary to rebuild economies shattered by war.[3] Government control over natural monopolies was common. Typical sectors included telephones, electric power, fossil fuels, iron ore, railways, airlines, media, postal services, banks, and water. Many large industrial corporations were also nationalized or created as government corporations, including, among many others: British Steel Corporation, Statoil and Irish Sugar.[4]


  1. "State-Owned Enterprises Catalysts for public value creation?" (PDF). PwC. Retrieved 16 January 2018.
  2. Profiles of Existing Government Corporations, pp. 1–16
  3. "All Men Are Created Unequal". The Economist. 4 January 2014. Retrieved 27 September 2015. Quote: «The wars and depressions between 1914 and 1950 dragged the wealthy back to earth. Wars brought physical destruction of capital, nationalisation, taxation and inflation»
  4. Starting in the late 1970s and accelerating through the 1980s and 1990s many of these corporations were privatized, though many still remain wholly or partially owned by the respective governments.