Dynamic Capabilities and the Management of Institutional Voids: A Case Study of Intra‐African Internationalization

Abstract

ABSTRACTInstitutional voids are often presented as challenges of doing business in emerging markets. We seek to understand how the presence of institutional voids impacts foreign operations and the capabilities required in such environments, within an African setting. We examine this through a qualitative case study of a South African MNE operating in Nigeria and investigate how different capabilities were utilized in addressing institutional voids. The findings indicate that the MNE differentiated between institutional voids that were known and predictable, versus those that were unknown before entry and by the level of volatility associated with them. The latter required increasing orders of capabilities. We demonstrate how distinct capabilities were deployed to address different consequences of voids. We explain the link between the institutional setting and the MNE process of orchestrating both internal and external resources allowing for a better understanding of how institutions impact on MNE capabilities.