Strategic responses of MNCs in emerging markets: addressing institutional voids associated with informal institutions
Critical Perspectives on International Business
ISSN: 1742-2043
Article publication date: 28 December 2020
Issue publication date: 21 February 2022
Abstract
Purpose
The purpose of this paper is to address the question how multinational corporations (MNCs) can respond to different domains of formal voids associated with informal institutions in emergent markets.
Design/methodology/approach
The author advances the institution-based view of international business strategy by developing a framework and six propositions. The theoretical distinction of informal institutions as an additional aspect when disrupting formal institutional voids are instrumental in developing a refined understanding of how MNCs can respond to institutional voids.
Findings
By emphasizing the notion of informal institutions that are associated with formal institutional voids, the author moves away from a unidimensional toward a multidimensional view of substituting formal voids. The presented response variety includes a variety of substitutes.
Research limitations/implications
Further research can apply qualitative research to further examine where, when and why social innovations can be used efficiently to address institutional weaknesses or absences. The author suggests further research opportunities in the implication section.
Social implications
Constituting substitutive formal institutions with complementary informal institutions can help strategic managers navigate business activities in emerging markets. Institutional weaknesses can be used as opportunities to create legitimacy and serve social needs. To help facilitate such impacts public policies need to be developed accordingly.
Originality/value
The paper provides a new and critical perspective on how MNCs can use institutional voids as opportunities. The author’s key contribution is to highlight specific substitutive actions from MNCs to institutional voids when different cultural-cognitive and normative circumstances apply in emerging markets.
Keywords
Citation
Koch, A.H. (2022), "Strategic responses of MNCs in emerging markets: addressing institutional voids associated with informal institutions", Critical Perspectives on International Business, Vol. 18 No. 2, pp. 137-156. https://doi.org/10.1108/cpoib-12-2019-0099
Publisher
:Emerald Publishing Limited
Copyright © 2020, Emerald Publishing Limited