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Article
Publication date: 5 June 2017

Sheng Huang, Guangyu Ye, Jinbo Zhou and Tiantian Jin

This paper aims to reveal the influencing mechanism of the interaction between institutional environments in the home and host country on the accelerated internationalization of…

Abstract

Purpose

This paper aims to reveal the influencing mechanism of the interaction between institutional environments in the home and host country on the accelerated internationalization of entrepreneurial enterprises from emerging economies (EE). The authors want to open the black box of home-country institutional environments’ moderating mechanism on the relationship between host-country institutional environments and accelerated internationalization.

Design/methodology/approach

The authors chose a massive interview method and case study method to answer this question. According to our standards, the authors chose four high-tech companies in Guangdong and Guangxi provinces as case study samples. During investigation in the four case companies, the authors collected print data of 150 pages and electric data of 3 pages. Then, the authors excavated concepts in data through open coding, axial coding and select-type coding and identified concepts’ dimensions and connections between them.

Findings

Well-developed home-country institutions can reduce the inhibitory effect of under-developed host-country institutions on the accelerated internationalization of entrepreneurial enterprises from emerging economies. Under-developed institutional environments in the home country are beneficial for entrepreneurial enterprises from EE to develop the institutional capability for entrepreneurial enterprises with stronger institutional capability from emerging economies. The inhibitory effect of under-developed institutional environments in the host country on their accelerated internationalization is weaker. The positive moderating role played by institutional voids in the home country on the relationship between institutional voids in the host country and the accelerated internationalization are mediated by the institutional capability of entrepreneurial enterprises from emerging economies.

Research limitations/implications

The authors just refined the definition of institutional capability and divided its dimensions. Issues such as operationalization of institutional capability and the development of measurement scale are also worthy for future quantitative research. Considering the inherent defect of case study and that these four case companies are from Chinese high-tech industry, the external validity our research may be limited. The theoretical model that was constructed generally captured the relationships between dual institutional environments, institutional capability and EE entrepreneurial firms’ accelerated internationalization decision. Future studies may use a large-scale sample to verify the all propositions the authors introduced to draw more steady and reliable empirical study results.

Practical implications

The conclusions have significant implications for governments in EE to construct friendly institutional environments for international entrepreneurship and for entrepreneurial firms to implement internationalization strategies.

Social implications

Policy makers should establish well-developed normative and cognitive institutional environment by cultivating global-orientated and open national culture and organizing experience exchange conference, thereby speeding up the implementation of internationalization strategies and further improving international competitiveness for a country.

Originality/value

First, the authors defined institutional capability as firms’ ability of establishing relationships with institution actors, adapting to institutional contexts, changing existing institutions or creating new ones to gain potential interests and suggested that it consists of three dimensions. Second, institutional voids in the home country positively moderate the relationship between under-developed institutional environments in the host country and the accelerated internationalization of entrepreneurial firms from EE. At last, institutional capability of firms negatively moderates the relationship between under-developed institutional environments in the host country and the accelerated internationalization of entrepreneurial firms from EE.

Article
Publication date: 9 January 2024

Salwa Bin Idrees, Syed Musa Alhabshi, Ashurov Sharofiddin and Anwar Hasan Abdullah Othman

The purpose of this study is to frame the dimensions of the external institutional environment, namely, cultural-cognitive, normative and regulative dimensions as the main actors…

Abstract

Purpose

The purpose of this study is to frame the dimensions of the external institutional environment, namely, cultural-cognitive, normative and regulative dimensions as the main actors in the organisational field. More precisely, Libyan commercial banks have been identified as empirical evidence, to identify constraints of the institutional environment governing the behaviour and decision-making of commercial banks, when adopting Islamic financial transactions.

Design/methodology/approach

A questionnaire has been designed for 14 Libyan commercial banks which is distributed to the Board of Directors, managers, directors of departments, and personnel. The exploratory factor analysis (EFA) and the measurement model by using the first-order and second-order confirmatory factor analysis (CFA) have been applied as essential steps to embody the conceptual framework and test the research hypotheses.

Findings

The results of the EFA indicated sufficient correlation among the dimensions of the external environment. The CFA supported this study’s hypotheses. The modelling showed that the cultural-cognitive, normative and regulative dimensions are institutional constraints impeding Libyan commercial banks’ adoption of Islamic financial transactions. Interestingly, the findings of the CFA align with the EFA findings in supporting the conceptual framework of the research. They portrayed that the cultural-cognitive dimension has been identified by explicit and implicit cognition.

Originality/value

This study systematically embodies the dimensions of the external institutional environment, namely, cultural-cognitive, normative and regulative dimensions, as the main factors in the organisational field to be conceptually rich lenses to investigate social considerations to reinforce institutional thought broadly. The results of this study were consistent with extant Islamic financial literature, reflecting symmetry and similarity across commercial banks, particularly at the first stage of adopting Islamic financial transactions.

Details

International Journal of Ethics and Systems, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2514-9369

Keywords

Book part
Publication date: 21 October 2019

Elizabeth Moore, Kristin Brandl and Luis Alfonso Dau

In the volatile, uncertain, complex, and ambiguous (VUCA) contemporary business environment intergovernmental organizations (IGOs) play a central role. Their objective is to align…

Abstract

In the volatile, uncertain, complex, and ambiguous (VUCA) contemporary business environment intergovernmental organizations (IGOs) play a central role. Their objective is to align member countries for collective global problem solving activities under the guidance of the organization. They aim at providing global stability and security through the creation of supranational institutions. While political sciences have studied IGOs from a global political perspective, little is known about the influence of these IGOs and their supranational institutions on country institutional environments and business environments. Thus, the purpose of this chapter is to understand how IGOs influence these national institutional environments, especially considering the countries’ development levels. By using regime and institutional theory we are able to conceptualize the relation of supranational and national institutions within the differently developed countries. We identify two interconnected factors that impact this analysis, the strength of the national institutional environment of member countries and their power in the IGO. Using these factors, we identify a clash and misalignment of national and supranational institutions in emerging countries, which is leading to enhanced VUCA business environments. We provide an exemplary case that discusses institutional schisms created by the International Monetary Fund’s (IMF) influence in Argentina. Moreover, the impact of IGOs is significant in least developed countries and has little to no impact in highly developed countries.

Details

International Business in a VUCA World: The Changing Role of States and Firms
Type: Book
ISBN: 978-1-83867-256-0

Keywords

Article
Publication date: 29 September 2022

Junying Liu, Zhixiu Wang, Jiansheng Tang and Jingcong Song

While there is a general belief that a defective institutional environment will lead to higher compliance risk, the current state of knowledge about how the institutional

Abstract

Purpose

While there is a general belief that a defective institutional environment will lead to higher compliance risk, the current state of knowledge about how the institutional environment affects enterprises' compliance is equivocal. This study aims to explore how does the host country's institutional environment affect the compliance risk perception of international engineering contractors and how to mitigate this impact.

Design/methodology/approach

This study empirically tests the impact of the institutional environment from the two dimensions of the institutional environment: legal completeness reflects whether the formal regulations are clear, detailed and comprehensive and legal effectiveness reflects whether rules and policies can be implemented effectively when the proper legal codes are provided. Based on 213 questionnaire data, this study uses partial least squares structural equation model (PLS-SEM) and Smart PLS software to test the hypothesis.

Findings

This study finds a negative relationship between the host country's legal completeness (LC) or legal effectiveness (LE) and a contractor's compliance risk perception. Further, the results show potential absorptive capacity (PAC) and realized absorptive capacity (RAC) of a contractor are critical for mitigating the impact of low LC in the host country, but not when LE is low.

Practical implications

The findings will be useful for international engineering contractors to respond to the compliance risk of the host country, both in choices of overseas investment locations and compliance capacity building.

Originality/value

This study reveals the impact of the host country's institutional environment on the compliance risk perception of international contractors, and provides theoretical guidance for how to alleviate the compliance barriers brought by the host country's institutional environment to international engineering contractors.

Details

Engineering, Construction and Architectural Management, vol. 31 no. 2
Type: Research Article
ISSN: 0969-9988

Keywords

Article
Publication date: 14 February 2023

Zhixiu Wang, Lifeng Shi and Haiqian Cui

The operation mode of enterprises will affect its resource commitment in the host country, involving different costs and time, as well as risks. Yet, the current state of…

Abstract

Purpose

The operation mode of enterprises will affect its resource commitment in the host country, involving different costs and time, as well as risks. Yet, the current state of knowledge about how the institutional environment affects the operation mode change of international construction enterprises is equivocal. This study aims to explore the impact of a host country's institutional environment on the operation mode change of international construction enterprises.

Design/methodology/approach

First, this study proposes a model on the impact of the institutional environment on the operation mode change of international construction enterprises. Second, this study used the Worldwide Governance Indicators (WGI) published by the World Bank and a questionnaire survey to collect data. Finally, the study employs a multiple regression methodology to test the hypothesis and discusses the results.

Findings

Results highlight that the important impact of the institutional environment on the operation mode change of international construction enterprises. The results showed that enterprises are more willing to increase resource commitments under the condition of stable institutional environment. In addition, enterprises' market-specific experience and general international experience, as moderating variables, weaken the impact of the institutional environment on the operation mode change. However, general international experience has no significant moderating effect.

Practical implications

The findings of this study provide practical implications for the investment risk assessment of international construction enterprises. Enterprises need to consider the change in institutional quality and institutional instability of the host country, as well as their own international experience when changing operation mode.

Originality/value

This study extends internationalization theory to the international construction field and provided theoretical guidance for the mechanism of operation mode change of international construction enterprises.

Details

Engineering, Construction and Architectural Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0969-9988

Keywords

Article
Publication date: 22 October 2018

Gunjan Kumar and Saundarjya Borbora

The purpose of the paper is to contribute to the understanding of regional entrepreneurial development by constructing an institutional environment index in India, where high…

6215

Abstract

Purpose

The purpose of the paper is to contribute to the understanding of regional entrepreneurial development by constructing an institutional environment index in India, where high heterogeneity is found in the economic development and entrepreneurial activities across its states. It tries to fill the gap of research which hampers the effectiveness of policy efforts to promote job growth through entrepreneurship development in India and contributes in understanding the phenomenon why the relative contribution of entrepreneurship varies across states.

Design/methodology/approach

The paper uses a composite index of institutional quality based on the Penalty for Bottleneck (PFB) methodology to capture the institutional environment differences across the states of India. The relationship between the institutional environment and the measures of entrepreneurship is established through various statistical and econometric techniques such as correlation and regression.

Findings

The paper finds the regional and contextual institutional environment differences in India starker and more varied than is generally viewed. The empirical evidence suggests that the differences in institutional quality scores can play a significant role in explaining the variations in the extent of entrepreneurial activities across the Indian states. The findings of this paper demonstrate a differential influence of the local institutional environment on the entrepreneurial activities at a regional level in a developing economy like India.

Research limitations/implications

This study is limited by the data sources and index design; therefore, it cannot completely specify all institutional factors and their combined influences on entrepreneurial activities at the regional level. However, it makes a significant contribution to expanding the current body literature of institutional environment reform and entrepreneurship development in developing countries.

Practical implications

The policy implication of the paper highlights the need of policymakers to think outside the individual policy silos and consider the institutional environment as a whole. Priority attention of the policymakers should be on the institutional reform for any type of entrepreneurship development. A corollary implication of the O-ring theory of development and the PFB methodology is that the policy effort is allocated most effectively when it seeks to alleviate bottlenecks.

Social implications

The main implication of this paper for the policymaking is that it is necessary to focus more on the weak institutional factors (bottlenecks) and on the general environment improvement for any entrepreneurship development.

Originality/value

The study contributes to study the problem of entrepreneurship discrepancy in India through the lens of institutions and institutional environment. This study is an improvement over the previous studies by testing the statistical significance of the institutional environment on the entrepreneurship.

Details

Journal of Entrepreneurship in Emerging Economies, vol. 11 no. 2
Type: Research Article
ISSN: 2053-4604

Keywords

Article
Publication date: 22 March 2013

Lanlan Cao and Daniele Pederzoli

The purpose of this paper is to analyze the international retailers' strategic responses to the institutional environment in emerging markets.

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Abstract

Purpose

The purpose of this paper is to analyze the international retailers' strategic responses to the institutional environment in emerging markets.

Design/methodology/approach

Based on in‐depth interviews with top managers from a grounded‐theory perspective, the research provides a comprehensive analysis of the implications of the institutional environment for the strategic choices of international retailers in an emerging market, especially in China.

Findings

The international retailer's strategic choices are often identified as pragmatism, dynamism, public policy‐orientation, seeking lead position in the market and decentralization if the institutional distance between the home country and host country is high. Moreover, when international retailers can commit to cultivating local markets and creating shared added value, they are better able to respond proactively to an institutional environment that is geared to a collective social network and still in a phase of transition.

Research limitations/implications

This paper focuses on only one country, China.

Originality/value

The major value of this paper is to highlight the specificities of international retailers' strategic responses to the institutional environment of an emerging market. Attention to these specificities would enable researchers to analyze better the reality of retail internationalization process in an emerging market.

Details

International Journal of Retail & Distribution Management, vol. 41 no. 4
Type: Research Article
ISSN: 0959-0552

Keywords

Article
Publication date: 29 November 2018

Lasse Torkkeli, Olli Kuivalainen, Sami Saarenketo and Kaisu Puumalainen

The purpose of this paper is to examine the impact of institutional environment on the international performance of small- and medium-sized enterprises (SMEs) and how this…

3015

Abstract

Purpose

The purpose of this paper is to examine the impact of institutional environment on the international performance of small- and medium-sized enterprises (SMEs) and how this relationship is influenced by network competence.

Design/methodology/approach

This study uses a quantitative approach. In total, 119 internationally operating Finnish SMEs from five industry sectors are sampled via a cross-sectional survey. Data are analysed through regression modelling.

Findings

The international performance of SMEs is influenced directly and indirectly by institutional drivers. The results show that network competence mediates the positive relationship between institutional drivers and international performance.

Research limitations/implications

Network capability development can help SMEs leverage more or less favourable institutional environments for successful internationalisation. Perceived institutional drivers directly result in higher performance, but the effect can be partially mediated by dynamic capabilities. The limitations of the study include its single-country context and the cross-sectional nature of the data.

Practical implications

SMEs should take their home countries’ institutional environments into account, but for long-term success, they should develop the ability to manage their business networks. A conducive institutional environment may help develop competence, which in turn can enable more successful internationalisation in terms of scale, scope and satisfaction.

Social implications

Decision-makers may benefit from knowing that, in addition to capabilities, an institutionally conducive environment that drives domestic SMEs towards international markets may be an antecedent of successful internationalisation in the SME sector.

Originality/value

This is one of the few studies to illustrate how network capabilities can mediate the influence of institutional factors on entrepreneurial internationalisation. It combines institutional theory and the dynamic capabilities view to explain successful SME internationalisation.

Details

International Marketing Review, vol. 36 no. 1
Type: Research Article
ISSN: 0265-1335

Keywords

Article
Publication date: 15 October 2010

Matthew C. Mitchell

Using an institutional theory perspective this paper aims to examine the influence of multinational corporations (MNCs) on host country institutional environments.

Abstract

Purpose

Using an institutional theory perspective this paper aims to examine the influence of multinational corporations (MNCs) on host country institutional environments.

Design/methodology/approach

This is a conceptual piece that introduces the concept of the country institutional profile (CIP) as a useful theoretical framework for analyzing the host country institutional environment.

Findings

The existing model that describes the MNC as a social change agent within host country institutions is extended. This is accomplished by utilizing the CIP as a more formal conception of the host country institutional environment. The model is then used to examine a specific case of the MNC impact on the host country level of environmentalism.

Originality/value

The value of the contribution lies in the application of the CIP for analyzing the host country institutional environment. Furthermore, this framework is applied to the case of the MNC's impact on host country environmentalism.

Details

Journal of Global Responsibility, vol. 1 no. 2
Type: Research Article
ISSN: 2041-2568

Keywords

Book part
Publication date: 15 December 2016

Karen D. W. Patterson, Michelle Arthur and Marvin Washington

Rigid environments, those with exceptionally strong cultural and traditional barriers to change, present unique challenges for institutional entrepreneurs attempting to initiate…

Abstract

Rigid environments, those with exceptionally strong cultural and traditional barriers to change, present unique challenges for institutional entrepreneurs attempting to initiate change. We utilize such a setting to examine what support mechanisms, both individual and contextual, have been utilized when attempting change in rigid environments. We examine the case of successful and unsuccessful attempts to make golf more inclusive to women. Our research supports the claim that rigid environments require more complex combinations of support mechanisms than other settings, illustrating the importance of institutions in both enabling and constraining change in such settings.

Details

How Institutions Matter!
Type: Book
ISBN: 978-1-78635-429-7

Keywords

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