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This study explains the international opportunity development of SMEs from emerging economies during institutional transition. This research enriches our understanding of how these firms adopt different approaches to developing international opportunities when they confront the turbulent institutional environment. We develop a phase-based framework for the evolution of transitional institution for SMEs’ internationalization and the SMEs’ internationalization process in that framework. By providing an empirical case study of a privately owned SME from China, the main finding is that SMEs from emerging economies become more entrepreneurial and proactive in developing the international opportunity during the institutional transition.

Literature, spanning industrial organization and strategic management disciplines, uses variance decomposition to understand the relative importance of firm, industry and business group effects in shaping profitability variations. Some literature analyzes firm profitability under transition to liberalization. Previous research has taken a static before-and-after view on institutional change. This paper aims to focus on the dynamic process of liberalization in India, analyzing how different institutional regime changes alter firm behavior leading to changes in profitability patterns.

Based on a panel data set of several thousand Indian firms, spanning the 26-year period between 1980-1981 and 2005-2006, the authors determine the relative importance of firm, industry and business group effects in explaining manufacturing firms’ profitability variances across different institutional phases. The authors evaluate three propositions that help assess transition dynamics between phases. They determine the quantum of catch-up or falling behind by firms.

Different industries emerge as profitability leaders, as the economy progresses through different liberalization phases. Business groups that have been more effective in resource appropriation, rent-seeking, politician management and non-market activities in a controlled regime are replaced as profit leaders by those that, in a free-market economy, can be capable of intra-business resource allocation tasks and leveraging corporate capabilities.

The approach demonstrates how to analyze the underlying detailed structure of firm-level data, and performance outcomes, to derive nuanced interpretation of factors giving rise to the effects that explain profitability variances, and how to assess the way these effects behave over time. The dynamic evidence-based approach highlights what factors matter, where, when and why, in influencing profitability variances, which are a key dimension of industrial and economic performance.

This study aims to examine an important mechanism in the policy-led institutional transitions in China, namely, Te Shi Te Ban (Special Treatments for Special Matters) – an institutional device that facilitates policy implementation. The discussions are contextualized based on the latest chapter of China’s institutional transition, known as the reform initiative of Fang Guan Fu (i.e. the FGF reform: delegate power, streamline administration and optimize government services), which is a policy regime introduced in 2018 to improve the state-market relationship for better socioeconomic development.

Based on the theoretical lens of proto-institutions and institutional work and using real-life examples from mass media, this perspective paper examines the effects of the Special Treatments in the institutional transition under the FGF Reform.

The Special Treatments are the proto-institutions purposively adopted by the regulators in China to innovate, supervise and renovate the rules and norms during policy implementation. They produce both incremental and radical institutional effects which allow for a more efficient and effective policy-led institutional transition.

This study contributes to institutional theory in the Chinese management context. Foremost, this study introduces the concept of proto-institutional work and shows how proto-institutions can serve as a mechanism to support and manage the process of institutional transition. In addition, to the best of the authors’ knowledge, this paper is the first to study the FGF Reform – the latest reform initiative in China and theorize an under-researched but important mechanism in its institutional environment – the Special Treatments for Special Matters.

Building on resource dependence theory and the dynamic institution-based view, this paper examines the influence of government affiliations on firm product innovation in a dynamic institutional environment.

Using unique panel data of Chinese manufacturing firms covering a period of 12 years (1998–2009) with 2,564,547 firm-year observations, this study chooses the panel Tobit model with random effects to explore the influence of government affiliations on firm product innovation, followed by an analysis to test the moderation effects of dynamic institutional environments.

The study findings suggest that Chinese firms with higher-level government affiliations have a relatively high product innovation performance. It finds that this innovation stimulating effect is contingent on the dynamic nature of the institutional environment. To be specific, a high speed of institutional transition may depress the positive innovation effects of government affiliations, while a more synchronized transition speed of institutional components may enhance the positive innovation effects of firms' government affiliations.

This study adds to a better understanding of the drivers of product innovation in Chinese firms that are situated in environments that are characterized by institutional change, using and contributing to resource dependence theory and the dynamic institution-based view.

This study aims to introduce an important temporal dimension to the research on institution and entrepreneurship in the transition period. This study develops the concept of pre-reform institutional embeddedness, and explores its impact on entrepreneurial reinvestment of private firms in China’s transition economy.

The authors used secondary data of a nationally representative sample of China’s private firms collected in the early days of the institutional transition period and applied ordinary least squares regressions and the Baron and Kenny approach to test the theoretical model.

Pre-reform institutional embeddedness has a negative impact on entrepreneurial reinvestment of private firms in the transition period. This relationship is mediated by guanxi-induced employment, such that pre-reform institutional embeddedness promotes guanxi-induced employment, which in turn discourages a private firm to reinvest. Additionally, the negative impact of guanxi-induced employment on entrepreneurial reinvestment is reduced when decentralization of decision-making is used.

First, entrepreneurs should be aware of pre-reform institutional embeddedness’ negative influence on firms’ risk-taking abilities and incentives. Private firms already constrained by this connection could alleviate the negative impacts through a widespread delegation of decision-making authority. Second, policymakers should be cautious about improper government-business relationships, which may discourage private firms from fully pursuing entrepreneurial growth opportunities.

This paper makes theoretical contributions to the literature on entrepreneurial reinvestment, embeddedness perspective of entrepreneurship and imprinting theory.

The purpose of this paper is to investigate the importance of political connections in the emerging market context.

A case study analysis of three Russian pharmaceutical firms is conducted to uncover how they performed through the Russian transition – the institutional upheaval of the 1990s – and the ongoing state-led industrialization.

In the early years of transition, firms heavily rely on political networking to gain legitimacy and fill institutional voids. As institutions strengthen, the need for political networking is being substituted by arm’s length networking. Strengthening of institutions also results in a more stable business environment, evolving firms’ strategies from short-term core competency concentration to long-term innovative visions.

Firms operating in the Russian, Commonwealth of Independent States and some other Eastern European state domains must be wary of complex ties that are prevalent in these countries and often can assist or hinder firm performance. Although formal institutions strengthen arm’s length networks, a close cooperation between strategic firms and the state remains.

The paper proposes two phases of the Russian transition and provides a taxonomy of strategic choices of Russian firms during the transition. Further, the paper describes the key institutional developments in the two phases of the Russian transition. Finally, a framework of political connections and their role in business operations in the two phases of the transition is provided.

Using various macro-level measures of economic and political performance Shleifer and Treisman (2005) and Treisman (2014) call Russia a “normal country” implying that Russia’s economic and political development is not deviating from the other middle-income or transition countries significantly. The purpose of this paper is to challenge this proposition and investigate whether Russia is a normal country in terms of entrepreneurship by comparing Russia with other post-socialist and similarly developed countries.

Many studies have examined Russia’s institutional setup to explain its deficiencies in entrepreneurial activity. However, there is a lack of comprehensive research taking into account both the individual and institutional dimensions of the entrepreneurial ecosystem. The authors use the Global Entrepreneurship Index (GEI) methodology to analyze Russia’s quality-related individual as well as institutional features from a system perspective in a single model.

Russia’s performance has been poor relative to the post-socialist countries and to most of the former republics of the Soviet Union. Russia’s entrepreneurial profile is different from other transition and similarly developed non-transition countries, as well. Russia’s scores are less than the scores of other post-socialist countries in six out of the nine pillars of entrepreneurial attitudes and abilities. In sum, conditions supporting entrepreneurship in Russia lag seriously behind other post-socialist countries. Moreover, Russia’s individual scores are even lower than the institutional ones. Hence, improving the hostile environment alone would not be sufficient for entrepreneurship development.

Although, there have been numerous studies analyzing Russia’s macroeconomic conditions, institutional development, and entrepreneurship, there is lack of comprehensive studies. Besides common macro-level measures, the authors use a unique, GEI data set that combines institutional factors relating to entrepreneurship or new business creation with measures of individual capabilities, motivations, and attitudes about entrepreneurship. The single-model framework reveals that individual factors are even greater obstacles to entrepreneurship development in Russia than the institutional factors that most studies focus on.

Platform, open/user innovation, and ecosystem strategies embrace and enable interactions with external entities. Firms pursuing these approaches conduct business and interact with environments differently than those pursuing traditional closed strategies. This chapter considers these strategies together highlighting similarities and differences between platform, open/user innovation, and ecosystem strategies. We focus on managerial and organizational challenges for organizations pursuing these strategies and identify four institutional logic shifts associated with these strategic transitions: (1) increasing external focus, (2) moving to greater openness, (3) focusing on enabling interactions, and (4) adopting interaction-centric metrics. As mature incumbent organizations adopt these strategies, there may be tensions and multiple conflicting institutional logics. Additionally, we consider four strategic leadership topics and how they relate to platform, open/user innovation, and ecosystem strategies: (1) executive orientation and experience, (2) top management teams, (3) board-management relations, and (4) executive compensation. We discuss theoretical implications, and consider future directions and research opportunities.

This study mainly aims to examine whether entrepreneurs’ utilization of political connections is purely egoistic. Addressing this issue could shed light on traditional debate which concerns whether political connections still have strategic value at advanced stage of institutional transition today in China. Here, at the background of Chinese economic transformation, the utilization of political connections is studied, and a double-role model of the pro-self-mechanism and the pro-social mechanism between political connections and performance in China is put forward.

This study uses survey of questionnaires randomly from 363 entrepreneurs in Jiangsu, Anhui and Shandong Provinces of China and adopts the first stage and direct moderation model in examination.

The results show that there exists mediated mechanism of both pro-self and pro-social mechanism in the relationship between political connections and firm performance. The authors conclude that utilization of political connections is not only purely egoistic but also altruistic. So, both dark-side and bright-side mechanisms of political connections in China are of equal importance. In addition, the authors take into consideration of the contingency effects of institution, industry and firm-level factors of this moderation model. The pro-self and pro-social mechanisms have differences in terms of moderator-within and moderator-between comparisons of these three contingency effects. Among these comparisons, the pro-self-mediating mechanism is most sensitive to changes of institutional quality, whereas the pro-social mediating mechanism is most sensitive to the uncertainty of industry competition.

This evidence furthermore verifies that the process of institutional transition is nonlinear and political connections still have strategic value in advanced stage of institutional transition today.

This study combines the dual perspectives of “give” and “take.” The former implies the pro-social motivation, while the latter implies the pro-self-motivation. Based on the framework of “resource-conduct-performance,” this study explores how these two mechanisms mediate the relationship between political ties and firm performance. In addition, the authors adopt the framework of “Strategy Tripod,” which was proposed by Peng et al. (2009) and examine the difference between pro-self and pro-social motivation at different level of institution environment improvement, industry dynamics and firm absorptive capacity.

The purpose of this paper is to contribute to the literature on institutional complexity by highlighting patterns of strategic behaviors of SMEs in institutional environments undergoing large scale transitions.

The paper uses five in-depth case studies of medium-sized enterprises in the Yangtze River Delta region to study their behaviors over the 2000-2012 period during which the institutional landscape in China underwent major changes.

The authors find that when institutional complexity is high, i.e., when neither the planned economy nor the market economy logic dominates, the role of organizational filters is more pronounced. In this situation, firm-level characteristics – its revenues and profitability, its competitive position and future prospects – play a dominant role in determining the nature of the strategic decisions and actions the firm undertakes.

The findings provide a nuanced perspective on strategic behaviors under institutional complexity. The qualitative research design offers rich insights but limited generalizability.

The findings offer practical insights to SME leaders in terms of exercising caution in undertaking unrelated diversification during periods of transition from planned to market economies.

The authors apply the concepts of institutional complexity and organizational filters in a context of large scale institutional transitions to study the strategic behaviors of SMEs over a 12 year period.