<p>This paper explores how ownership structure shapes corporate entrepreneurship, paying particular attention to the mediating role of the entrepreneurial climate. While entrepreneurship is often associated with privately-owned enterprises (POEs), state-owned enterprises (SOEs) face distinctive institutional and organisational challenges that can hinder their ability to foster innovation and risk-taking. This paper examines how state ownership affects entrepreneurial intensity through its impact on the internal climate for entrepreneurship, using multiple theory approach. Starting from the agency theory, we develop a theoretical framework by introducing a resource-based view and institutional theory. Using data from 139 Croatian firms with varying ownership structures, the study shows that the negative association between state ownership and entrepreneurial outcomes is not direct but is fully mediated by the entrepreneurial climate. These findings highlight the importance of internal organisational conditions in shaping entrepreneurial behaviour under state capitalism. The paper contributes to ongoing debates by integrating a multi-theoretical perspective and offering both theoretical and managerial insights into how ownership structures influence innovation and corporate entrepreneurship.</p>