Session 147

Emerging Market Firms and Complex Institutional Environments

Track A

Date: Monday, October 8, 2012


Time: 08:00 – 09:15

Common Ground

Room: Meeting Room 2.1


  • Luis Dau, Northeastern University

Title: Effect of Institutional Resources on Firm Competitive Advantage: Evidence from the Indian Textile Industry


  • Raveendra Chittoor, University of Victoria
  • Preet Aulakh, York University
  • Oana Branzei, University of Western Ontario

Abstract: In an era of global competition, there is a growing interest within the strategy field to study how the institutional environments influence firm strategies and competitive advantage. In this paper, we further this research by examining how access to institutional resources provided through a government program (Technology Upgradation Funds Scheme (TUFS)) influenced firm competitive advantage within the Indian textile industry. Results from a panel of firms during the 1989-2010 period show that utilization of these institutional resources enhanced export growth of firms. Furthermore, we find that the relationship between institutional resources and export growth is moderated by two types of quasi-institutions within which individual firms are embedded, namely business groups and geographical clusters.

Title: How to Survive in Developed Economies: An Environment Partitioning Perspective for Emerging Market MNEs


  • Lei Li, University of Nottingham
  • Weilei Shi, City University of New York
  • Li Sun, University of Missouri-Kansas City

Abstract: How do emerging market multinational enterprises (MNEs) survive in developed economies wherein global incumbents are rooted? This paper endeavors to fill this void in the international management literature. Our case studies, in conjunction with the relevant literature reveal that emerging market MNEs need to enhance local effectiveness and legitimacy by, inter alia, leveraging both home country competitive advantages and institutional embeddedness. The long term viability of these new comers lies in (1) the co-evolving integration between host country and home country technical environments, (2) the co-evolving reconciliation between host country and home country institutional environments, and (3) the co-evolving balance between their strategic independence and home country institutional embeddedness. We elaborate on scholarly and practical implications at the end.

Title: Institutional Complexity, Political Capital, and Corporate Diversification Strategy in China


  • Xiaowei Luo, INSEAD
  • Jiyang Dong, INSEAD

Abstract: Using a 7-year panel data of of Chinese listed firms, we examine how institutional complexity influenced corporate diversification by shaping firms’ perceived templates of success and their use of resources. We find that, compared with in regions with stronger market institutions, privately-owned (i.e., where the largest shareholder is not the state) firms diversify more in regions with weak market institutions, and they are more likely to use political capital for diversification. We also find important differences in diversification among private firms from different origins such as previous state ownership and family firms. Our study contributes to research on diversification, political capital, and family business by highlighting the contingencies of institutional complexity.

Title: Rationalization and Professionalization of Emerging and Transition Economy Firms: An Institutional Approach to Absorptive Capacity


  • Kathleen Yi Jia Low, WU-Vienna
  • James Robins, WU-Vienna

Abstract: Knowledge transfer from foreign partners is one of the most important ways that emerging and transition economy firms improve existing capabilities and create new ones (Hitt et al. 2004). However, knowledge transfer is challenging; it relies on absorptive capacity that emerging and transition economy organizations may lack (Zhang et al. 2010). In this paper, we explore ways that institutional theory can be used to understand processes of rationalization and professionalization that help emerging and transition economy firms achieve greater absorptive capacity. Rationalization and professionalization have key roles in making emerging and transition economy firms more like their foreign partners in structure and practices. This isomorphic change is vital to the development of absorptive capacity needed for effective knowledge transfer from foreign sources.

Title: Strategic Choices in the Foreign Direct Investments of Polish Firms


  • Krzysztof Obloj, Kozminski University
  • Aleksandra Wasowska, University of Warsaw

Abstract: The objective of the study is twofold. First, we want to study the strategic choices of Polish firms’ FDI locations to test whether the pattern of OFDI can be explained with existing typology of motives for FDI. Second, we want to test if the global crisis affected the strategic choices of Polish companies in making FDI decisions. We provide empirical support for the notion that existing theories of FDI, even if they might need refinement when applied to the specific business context, are pretty robust in explaining the logic of strategic choices for FDI from emerging economies. Also, we document that the immediate impact of the global crisis on the pattern of Polish outward FDI is limited until now, and it affects the strategic choices of the companies in a predictable way, forcing them to rethink and limit their internationalization pace.

Title: To Expand Up Or Downmarket: That Is The Question


  • Luis Dau, Northeastern University

Abstract: Building on Knowledge-Based Theory, I argue that pro-market reforms augment the profitability of firms by increasing their competitiveness and market knowledge. However, I propose that this effect is greater for firms that operate internationally; firms that operate in more advanced markets; and firms that become multinationals before reforms are implemented. This is because such firms are able to acquire market knowledge abroad that they can use when responding to reforms at home, giving them a head-start advantage over other local firms. The analyses of a panel of the largest 500 Latin American companies from 1989-2008 provide support for these arguments.

All Sessions in Track A...

Mon: 08:00 – 09:15
Session 147: Emerging Market Firms and Complex Institutional Environments
Mon: 09:30 – 10:45
Session 220: Political Strategies in Transition Contexts
Mon: 13:30 – 14:45
Session 221: National Institutions and Firm Behavior
Mon: 16:30 – 17:45
Session 154: Embeddedness, Networks and Non-Market Strategies
Tue: 08:00 – 09:15
Session 153: Cognition, Bounded Rationality and Strategy
Tue: 11:00 – 12:15
Session 151: Coevolution of Institutions and Firm Strategy
Session 152: Institutional Change and Innovation
Tue: 14:15 – 15:30
Session 155: Institutional Transitions and Internationalization Strategies
Tue: 15:45 – 17:00
Session 219: Strategic Responses to Institutional Change
Tue: 17:30 – 18:45
Session 150: Legitimacy, Liabilities and Institutions

Strategic Management Society