AbstractHow to improve the operational efficiency of state‐owned enterprises (SOEs) is an important issue facing emerging economies or developing countries. This study investigates whether and how business strategies of SOEs affect the participation of non‐state‐owned capital using Chinese enterprises from 2008 to 2019. The study finds that there is a positive effect of aggressive corporate strategy on the motivation of private capital to participate in mixed ownership reform. Mechanism tests have shown that prospector strategy increases the reform motivation of SOEs by boosting investment in technological and knowledge capital and financing demand and also increase the willingness of private enterprises to participate by increasing SOEs' value. Further research is found that when the SOEs are more politically connected, in commercial competition industries, and located in regions with cleaner governments, the effect of business strategy on the participation of non‐state‐owned capital is more significant. This study not only enriches relevant research on the factors influencing mixed ownership reform at the micro level but also provides valuable experience and reference for economic reforms in emerging markets and developing countries.