Purpose – This study explores the relationship between state ownership and labour cost stickiness across strategic and non-strategic industries in developing economies. It aims to uncover how non-economic considerations and sociopolitical objectives influence cost behaviour in state-owned enterprises (SOEs), particularly within strategic sectors. Design/methodology/approach – The research employs data from 151 firms listed on the Tehran Stock Exchange from 2011 to 2021. Using multiple linear regression analysis with year and industry-fixed effects, the study investigates the impact of state ownership on labour cost stickiness, considering the moderating role of industry type. Findings – The analysis reveals a significant influence of industry type on the relationship between state ownership and labour cost stickiness. SOEs exhibit higher labour cost stickiness, especially in strategic industries subject to greater public scrutiny and government intervention. These findings align with agency theory, highlighting how sociopolitical pressures shape SOEs’ managerial decisions and cost management strategies. Originality/value – This research fills a crucial gap in the literature on cost behaviour in developing countries, emphasising the importance of industry-specific strategies in mitigating labour cost stickiness in SOEs. It provides new insights into how state ownership and sociopolitical objectives affect cost management, offering valuable implications for policymakers and managers in similar economic contexts.

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