Institutional Voids and Developed Multinationals’ R&D Resource Commitments in Emerging Economies

Abstract

Institutional voids influence the resource commitments to technology transfer that multinationals make to their local subsidiaries. Extant research primarily adopts a deterministic view of the institutional environment and gives contradictory findings in this relationship with little attention given to contingent factors. Using an institution-based perspective and the lens of institutional voids as opportunities, this conceptual paper examines the mediating mechanism of government R&D support between institutional voids and technology transfer, and the moderating role of digital readiness. I argue that (1) developed multinationals use government research and development (R&D) support to exploit opportunities from institutionally voided emerging economies, and (2) digital readiness of emerging economies positively moderates the relationship between government R&D support and technology transfer. The discussion contributes to a greater understanding of the interplay between institutions and firm’s investment decisions across different international environments.