Institutional duality incidence on subsidiaries: configuration, differentiation and avoidance strategies

Abstract

PurposeTo illustrate how threats of institutional duality (ID) incidence subsidiaries confront are converted to opportunities, by conceptualizing how subsidiaries attain operational legitimacy at both their headquarters (HQs) and host countries.Design/methodology/approachUsing a systematic literature review, the authors build on institutional theories by analyzing the ID literature along its structure, main processes and outcomes. The authors configure frameworks of both HQ control systems and host countries' institutional threats, showing how subsidiaries contingently navigate across them using configuration, differentiation and avoidance strategies.FindingsThe authors’ findings show that “foresighted” subsidiaries attain operational legitimacy through configuration, differentiation and avoidance of threats incidental to ID, by strategizing along certain formal and informal institutional variables including legal, sociocultural and technical factors.Originality/valueThe authors propose “structural configuration of ID incidence” and “subsidiary path to legitimacy” frameworks. The former configures how the interaction between HQ and host countries' variables constitute ID incidence threats. The latter highlights how “foresighted” subsidiaries use configuration, differentiation and avoidance strategies to attain operational legitimacy.