The Influence of National Institutions on Multimarket Contact in the Global Mobile Phone Industry

Abstract

We argue that multinational enterprises (MNEs) that use multimarket contact (MMC) to coordinate strategy with rivals in host countries must contend with the institutional quality of host countries. Drawing on signaling theory and institution-based view, we propose that institutional quality can influence the observability of actions by an MNE’s rivals in a host country, thereby affecting the MNE’s ability to use MMC to establish mutual forbearance with host country rivals. We test our hypotheses using a sample of 85 mobile phone vendors in 46 countries.