Session 219

Strategic Responses to Institutional Change

Track A

Date: Tuesday, October 9, 2012


Time: 15:45 – 17:00

Common Ground

Room: Meeting Room 2.1


  • Gabriel Szulanski, INSEAD

Title: A Classification of Institutional Transitions as Strategic Management Phenomena


  • Antonio Gelis Filho, Getulio Vargas Foundation

Abstract: I present in this conceptual work a classification of institutional transitions. It is sustained here that from the point of view of strategic management, the significance of a process of institutional transition for a specific company is related to three variables: the expected net institutional strategic bonus (ISB) for the company, pre- and post- institutional changes; the velocity of institutional modification (VIM) in the environment and the reversibility of the institutional modifications (RIM). Those variables define eight types of institutional changes. As shown here, from a strategic management standpoint institutional transitions are heterogeneous phenomena and their classification depends as much on the relationship between a company and the institutional environment on which it is embedded as on the institutional changes per se.

Title: Do Strong Institutions Hurt SMEs’ Survival and Recovery Rates During Crises?


  • Ilgaz Arikan, Kent State University
  • Oded Shenkar, Ohio State University

Abstract: During times of stability, strong institutions smooth out exchange frictions, mitigate transactional hazards, and positively impact the firms. During crises which introduce uncertainties that institutions cannot handle, firms that have failed to accumulate experiences in dealing with hardship will have lower rates of survival and recovery. Using SME data on economic, financial and political crises in Europe and Latin America between 1960-2010, we find that SMEs that deal with repeated shocks, economic fluctuations and disturbances compared to their counterparts in weak institutional environments have a higher rate of survival and faster recovery compared to their counterparts in strong institutional environments during major global crises. Forming cooperative ventures increase the SME survival rates, and equity based cooperative agreements result in faster recovery compared to other forms.

Title: How Do Firms Sense and Seize Business Opportunities Created by an Institutional Change?


  • Elisa Vuori, Aalto University
  • Inkeri Ruuska, Helsinki University of Technology
  • Liisa Sallinen, Aalto University

Abstract: Strategic change is explained to be a response to an environmental change. An environmental change does not lead deterministically to a strategic change, and managerial actions play a significant role in recognizing and reacting to the change. Environmental change may create new business opportunities, and firms may utilize these opportunities if they have suitable dynamic capabilities. We study an institutional change in Finnish nuclear industry to find out how firms recognize the business opportunity and employ their capabilities and resources to enter the large projects of nuclear power plant construction. We find out that firms whose core businesses are close to the energy industry anticipate the institutional change and develop capabilities beforehand, whereas most companies in related sectors realize the business opportunity when projects start.

Title: Organizational Adaptation to Discontinuous Changes in Competitive Environment: MNCs vs. EMNCs


  • Zdenek Necas, Western University

Abstract: Three adaptation mechanisms employed by Incumbent Multinational Corporations (MNCs) responding to the rise of Emerging Multinational Corporations (EMNCs) are proposed. Each adaptation mechanism is related to specific market discontinuity induced by EMNCs and requires modification of various organizational elements. These adaptation mechanisms are intra-organizational decoupeling in response to the shift in legitimacy patterns, inter-organizational collaboration in response to EMNCs’ privileged access to firm- and country-level resources and business model redesign in response to EMNCs’ elimination of global structural holes. Intervening variables moderating the adaptation outcome are outlined: framing of the rise of EMNCs, development of absorptive capacity specific to EMNCs and employment of effective organisation change intervention types. A model of MNC adaptation is proposed linking adaptation mechanisms and intervening variables to MNC adaptation outcome.

Title: Strategic Restructuring as the Winning Competitive Weapon to Face Institutional Transitions: A Knowledge-Based Conceptual Framework


  • Florian Zock, University of Mannheim

Abstract: In this paper I develop strategic restructuring as a conceptual framework which is best suitable to generate competitive advantage and firm performance in the face of the current transitions and market disruptions. I conceptualize strategic restructuring as a multi-dimensional construct involving the firm’s engagement in alliances and networks, business model (re)design, and managing dynamic capabilities. Theoretically, I take a knowledge-based view. Hence, I argue that strategic restructuring assists firms in achieving competitive advantage and generating superior performance, by accessing external knowledge flows and building up internal learning capabilities.

Title: The Story of Succession: Ruin & Recovery of Silicon Valley Industries following Disruption, 1990-2009


  • Nydia MacGregor, Santa Clara University
  • Tammy Madsen, Santa Clara University

Abstract: This paper integrates work on competitive positioning, institutional theory, and ecological theory to examine succession – defined as the orderly recovery in the composition and structure of an ecological community or region after a fundamental disruption. We examine how the characteristics of industries (such as firms competing in enterprise applications), the organizational communities to which they belong (e.g., software ecosystem), and their environment (e.g., Santa Clara County as one example) affect patterns of founding and subsequent failure in areas that have experienced a significant disruption. Using data on all organizations operating in California from 1990 to 2009, we analyze the process of recovery of firms and industry sectors in the Silicon Valley following the dot com bubble burst in March of 2000.

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