Institutional Duality Research Articles

Institutional Duality in Land Administration: Insights from Collaborative Governance in Ghana

Institutional Duality in Land Administration: Insights from Collaborative Governance in Ghana

Ceremonial implementation at overseas locations: a multi-case study of a bilateral development agency

PurposePrior institutional duality research asserts that ceremonial implementation of organisational practice protects multinational corporations’ subsidiaries. However, the temporal dynamics of the safeguarding function has been under researched. Public sector organisations have also been ignored. This research aims to explore how the safeguarding function is created, maintained and disrupted using the overseas offices (OOs) of a bilateral development agency (BDA) as a case.Design/methodology/approachA multi-case study, underpinned by neo-institutionalism, was conducted. Data obtained from in-depth remote interviews with 39 informants from the BDA OOs were analysed using the “asking small and large questions” technique, four analytical techniques, cross-case synthesis and theoretical propositions.FindingsA three-phase process was identified. The first phase is the appearance of discrepancies due to institutional duality. The second is the emergence of ceremonial implementation as a solution. In the third phase, “the creation, maintenance and disruption of a safeguarding function” begins. When ceremonial implementation successfully protects the OOs, the safeguarding function is created. The OOs are likely to repeat ceremonial implementation, thus sustaining the function. Meanwhile, when conditions such as management staff change, ceremonial implementation may not take place, and the safeguarding function disappears.Research limitations/implicationsThe BDA OOs may not face strong host country regulative pressures because they are donors to aid-recipient countries. Hence, the findings may not directly apply to other public sector organisations.Practical implicationsDevelopment cooperation practitioners should understand that ceremonial implementation is not exclusively harmful.Originality/valueTo the best of the author’s knowledge, this is the first institutional duality research that explores the temporal dynamics of safeguarding functions targeting public sector organisations.

The Multinational Enterprises Strategies in Emerging Economies

The purpose of this paper is to review international business articles, particularly what strategies in emerging economies and multinational enterprises subsidiaries strategies. There are two main papers utilized, the first one is Hoskisson, Eden, Lau and Wright's 2000 article, entitled Strategy in Emerging Economies. Strategy formulation and implementation by private and public enterprises in a variety of regional contexts and from three major theoretical perspectives: institutional theory, transaction cost economics, and the resource-based view of the firm. The second paper is Amy J Hillman and William P Wan's 2005 article, The Determinants of MNE Subsidiary Political Strategies: Evidence of Institutional Duality. Using recent theoretical advances in institutional theory that acknowledge that MNE subsidiaries face pressures for isomorphism both within the corporation (internal legitimacy) and within the host country (external legitimacy). A common thread can be drawn between these two articles, namely the use of institutional theory in determining the strategy for multinational enterprises.

Ownership, institutions, and the agency of M&A completion

AbstractResearch SummaryIn this paper, we study how variations in debt and equity ownership and the institutions that govern interactions between different types of principals and agents affect the completion likelihood of acquisitions. Using a sample of 55,722 acquisitions, our study finds that risk‐averse debtholders reduce the completion likelihood of acquisitions. When acquisitions cross borders, the acquiring capital providers become exposed to institutional environments that have evolved to prioritize different ideologies or principals because of the structure and customers of local capital markets. As a result, institutional duality in home and target countries reduces the completion likelihood of acquisitions. Our study integrates varieties of capitalism arguments and firm‐level agency conflicts and highlights the theoretical importance of capital markets and their concentration.Managerial SummaryAn acquisition is a highly consequential negotiation process between managers and capital providers of a firm. Based on their evaluation of a potential deal, managers propose acquisitions to capital providers who either accept it or pressure managers into withdrawing from the announced deal. This study considers firms' capital structure and cross‐national differences in the governing institutions to explain the resistance of capital providers against announced acquisitions. In particular, it points to the fear of capital providers losing control of their firms as a driver of their resistance against cross‐border acquisitions. However, when a favorable capital‐market structure in the target's home country alleviates the fears of capital providers, their resistance weakens.

The Multinational Enterprises Strategies in Emerging Economies

The purpose of this paper is to review international business articles, particularly what strategies in emerging economies and multinational enterprises subsidiaries strategies. The first paper is Hoskisson, Eden, Lau and Wright's 2000 article, entitled strategy in emerging economies. Emerging economies are low-income, fast-growing countries that rely on economic liberalization as their primary growth engine. Emerging Economies investigates strategy formulation and implementation by private and public enterprises in a variety of regional contexts and from three major theoretical perspectives: institutional theory, transaction cost economics, and the resource-based view of the firm. The second paper is Amy J Hillman and William P Wan's 2005 article, The Determinants of MNE Subsidiary Political Strategies: Evidence of Institutional Duality. A model of the determinants of political strategies used by foreign subsidiaries of multinational enterprises (MNEs) is developed and tested in this study by integrating international business and political strategy literature to create a multilevel model of the subsidiary, host country, and parent determinants of political strategy. Using recent theoretical advances in institutional theory that acknowledge that MNE subsidiaries face pressures for isomorphism both within the corporation (internal legitimacy) and within the host country (external legitimacy). A common thread can be drawn between these two articles, namely the use of institutional theory in determining the strategy for multinational enterprises.

All or nothing: International coalitions responding to competing pressures in challenges to IP rights

Foreign subsidiaries face ‘institutional duality’ from competing parent-firm and host-country conformity pressures. However, international coalitions of firms experience pressures to conform from multiple parents, resulting in ‘institutional multiplicity.’ We argue that coalition members bargain and satisfice to agree upon goals and responses to external pressures. As institutional multiplicity increases, coalition responses are increasingly framed around simple threshold-type goals all members can agree upon. We test this idea in the context of international coalitions challenging biotechnology and organic chemistry patents of competitors in the United States Patent and Trademark Office's Patent Trial and Appeals Board. Our analysis includes 946 observations, and finds that larger coalitions with greater variance in member home-country patent enforcement institutions are more likely to pursue strategies that have a simple performance goal all members can agree upon: having a competitor's patent invalidated instead of a settlement. This relationship is further enhanced when coalition members have diverse levels of strategic interest, captured by variance in portions of coalition members' overall patent portfolios belonging to the same patent family as the disputed patent.

MNEs and the Duality of Institutions: Regulative Pressures, Social Responsibility Pressures and FDI

Given the constant changes taking place in the international business (IB) landscape, a firm’s institutional environment is recognized as a key source of uncertainty. Addressing calls to explore how multinational enterprises (MNEs) strategize to manage complex institutional pressures, this paper examines the effects of institutional duality on entry mode choices. We explore how key institutions – both at home and abroad - affect MNEs’ foreign direct investment (FDI) decisions. In practice, country of origin still matters as MNEs seek to manage the pressures exerted by their host institutional environments, whilst also strategizing to maintain home market institutional legitimacy. Further, we propose and show that regulative and normative institutional pressures affect the choice of FDI mode differently. Using a sample of 44,881 FDI events between 2013 and 2019, we show that higher degrees of FDI such as wholly owned subsidiaries, tend to be used by MNEs when the distance between normative institutions, i.e., home and host CSR norms and practices, is high. Whilst regulative distance is managed through setting up joint venture relationships, wholly owned subsidiaries are chosen to control whether, and to what extent, MNEs adapt to different, host market CSR standards and practices.

External dynamics during the Arab Spring: Institutional duality in dynamic external environments

External dynamics have the potential of unforeseeably and drastically changing market conditions and bear great risks and uncertainty. In this case study on the Arab Spring, we explore the effects of external dynamics on institutional duality, i.e., institutional pressures that foreign subsidiaries are confronted with through headquarters (internal) and host country environments (external). Based on an analysis of a European water boiler manufacturer with a production site in Egypt, we analyze institutional pressures before and during the Arab Spring as well as foreign subsidiary and MNE HQ reactions to changed external pressures. We find that external pressures and uncertainty increase in a situation of external dynamics, leading to higher internal pressures. However, MNE HQs decrease internal pressures exerted on subsidiaries if HQs trust subsidiary control mechanisms. Moreover, subsidiaries can influence internal pressures by constructing their internal legitimacy. Our observation of a direct relationship between external and internal pressures and of subsidiary and HQ responses to institutional duality in a dynamic environment represent important contributions to institutional duality literature.

CSR policies and practices of Korean foreign subsidiaries: institutional duality in emerging economies

ABSTRACT This study uses the institutional duality perspective to conceptualize and divide the local CSR activities of foreign subsidiaries into policies and practices. For an empirical analysis, the study uses survey data collected from 147 Korean foreign subsidiaries in emerging economies, mostly in China and Vietnam. The results indicate the positive effect of the subsidiaries’ CSR policies and practices on their social impact in the host country. Intriguingly, social impact fully mediates the relationship between CSR practices and the strategic performance of the subsidiaries. This finding sheds light on the long-term performance effect of CSR practices in the host country.

Institutional duality and human resource management practice in foreign subsidiaries of multinationals

AbstractWe examine how institutional context affects the decisions that subsidiaries of multinational corporations (MNCs) make in pursuing particular human resource management (HRM) practices in response to institutional duality. Drawing on Varieties of Capitalism, along with the concept of intermediate conformity, we argue that the use of particular HRM practices by MNC subsidiaries will differ depending on both the combination of home and host institutional contexts, and on the nature of the particular practice under consideration. Using data from a survey of HRM practices in 1196 firms across 10 countries, we compare HRM practices in subsidiaries located and headquartered in different combinations of liberal and/or coordinated market economies. Our study suggests MNC subsidiaries conform only to the most persuasive norms, while exercising their agency to take advantage of the opportunities presented by institutional duality to adopt practices that distinguish them from indigenous competitors.

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

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.

Does the Choice of IJV under Institutional Duality Promote the Innovation Performance of Chinese Manufacturing Firms? Evidence from Listed Chinese Manufacturing Companies

The relationship between the strategic choice of internationalization under institutional duality and the performance of emerging market multinational enterprises (EM-MNEs) will become a focal point for scholars, practitioners and policy makers in the future. In order to better understand the determinants of the entry mode choice under institutional duality for EM-MNEs, based on the sample of Chinese manufacturing listed companies ‘going out’ from 2003 to 2015, we investigated the impact of organization institutional inertia and host-country institutional quality on the choice of the international joint venture (IJV) of Chinese manufacturing firms, as well as the effect and potential problems of the IJV choice on the firms’ innovation performance under institutional duality. The main results of our empirical analyses provide evidence that the response to institutional duality means that Chinese firms have the possibility to choose IJV in entry modes ahead of their capability support, and subject to insufficient professional field accumulation, cross-cultural management and joint governance capability, this premature choice of IJV actually hinders their innovation efficiency. Furthermore, the test on the influence of firm heterogeneity found that, when the firm is privately owned or has a lower internationalization breadth, the above negative moderating effect of IJV choice is more significant. Our findings enrich the literature on the relationship between the strategic choice of internationalization and innovation performance of EM-MNEs, and provide inspiring and straightforward empirical evidence.

Are Geographical Dispersion and Institutional Dispersion Related to Accounting Misstatements?

We examine the relation between geographical and institutional dispersion and accounting misstatements in China. We hypothesize that geographical dispersion is positively associated with the likelihood of accounting misstatements in subsidiary firms because of increasing monitoring cost and find evidence consistent with this prediction. We also focus on institutional dispersion because institutional duality may affect an organization’s behavior, but do not find that institutional dispersion is associated with accounting misstatements in subsidiary firms. Next, we find that geographical dispersion and institutional dispersion are negatively associated with misstatements in parent firms’ financial statements, consistent with the investor recognition argument. Lastly, we find that the negative (positive) relation between dispersion and parent-level (subsidiary-level) misstatements is more pronounced for state-owned firms and for firms with a wider (narrower) control-ownership wedge.

Managing corporate community responsibility in multinational corporations: Resolving institutional duality

Addressing calls to explore how subsidiaries of MNCs operating in different institutional contexts resolve institutional duality, this paper brings together dual theoretical explanations from legitimacy and neo-institutional theory, to examine how decision-making for corporate community responsibility (CCR) occurs across ten subsidiaries operating in Sri Lanka. Using qualitative data, it shows that while subsidiaries’ implementation of local CCR conform to that of their parents at an aggregate level, those subsidiaries encountering higher levels of institutional conflict in the host-country, are sanctioned by their parent companies to de-couple their local CCR projects. These findings raise interesting questions about the dynamism in subsidiary responses to resolving institutional duality relevant for future scholarly research.

Political Capabilities, Institutional Duality, and MNE – Local Firm Rivalry in an Emerging Market

Recent corporate political activities (CPA) studies have shown that MNE subsidiaries’ political capabilities in emerging markets are shaped not just by host country institutions, but by home countr...

Stakeholder influence, institutional duality, and CSR involvement of MNC subsidiaries

This paper uses stakeholder influence and institutional duality arguments to investigate the influence of stakeholders on foreign subsidiaries' corporate social responsibility (CSR) practice. Voluntarily, or under pressure from various stakeholders in the host country, the foreign subsidiaries engage in CSR activities to maintain and enhance their legitimacy in the country. The authors identify two types of stakeholders, primary and secondary, and two types of CSR practice, symbolic and practical, and predict that primary stakeholder influence affects symbolic CSR, whereas secondary stakeholders' influence affects practical CSR. The authors also predict that the impact of stakeholders is greater when the subsidiary enjoys greater autonomy, but weaker when the host country is plagued with institutional voids. Analysis to address the research hypotheses is conducted upon a dataset collected from a sample of Korean subsidiaries, the majority of which operate in China and Vietnam. The analysis generally supports the hypotheses.

The dilemma of institutional duality and multinational firms 1967-2017

PurposeThe purpose of this paper is to improve the understanding of the dilemma of institutional duality (ID) confronting multinational corporations and to propose a workable solution for this problem.Design/methodology/approachThe author has searched the literature using several terms directly related to the dilemma of ID and multinational firms.FindingsThe findings reveal that to attain “legitimacy”, subsidiaries strive to balance institutional pressures stemming from external environments in the host country and their parent organizations. Understanding institutional theories of multinational corporations enables the subsidiaries to manage external pressures. ID impact varies among subsidiaries, depending on institutional contexts and internal strategies of subsidiaries.Originality/valueAn “institutional duality incidence model” portraying how dual institutions make “legitimacy” problematic for subsidiaries is proposed. A framework for identifying factors generating ID dilemma and their management approach is also proposed. It is concluded that a multinational corporation that recognizes ID as a central concern is more likely to achieve and maintain a higher level of harmony with its subsidiaries and host countries.

Coping with Autocracy: Corporate Political Activity, Institutional Duality, and MNE Local Firm Rivalry During 'Institutional Backsliding'

This study contributes to the corporate political activities and the institutional duality literatures by investigating how MNE subsidiaries develop their political capabilities in an increasingly politicized environment in an emerging market (EM). Our study supports the view that institutional duality is not just a constraint but a resource for MNEs. Contrary to previous studies, we show that even firms from institutionally distant economies can successfully transfer political capabilities to the host context, providing them with competitive advantage over local firms. We contribute to the theory by showing that institutional duality needs to be understood as a time-dependent phenomenon.

Financial dimension of internationalization: serving two masters

PurposeDrawing on the agency and institutional theory, this paper aims to explore how financial internationalization shapes firm performance through the influence of foreign actors.Design/methodology/approachBy using a unique panel database, composed of over 26,000 curricula and 4,000 corporate reports from approximately 450 Brazilian companies, the effects of financial internationalization were explored in a longitudinal view by using multiple regression analysis with fixed effects.FindingsThe results present consistent and non-trivial effects of financial internationalization on firms’s performance. When tested together, foreign ownership showed inconclusive results, foreign directors and depositary receipts showed a positive association with performance and foreign currency debt showed a negative association.Research limitations/implicationsIn most cases, the data on foreign stakeholders, foreign directors and foreign currency debt do not address the home country.Practical implicationsServing the interest of foreign stakeholders from multiple institutional perspectives can be a challenge for managers. The findings of this study provide an opportunity for research focusing on institutional duality and financial internationalization.Originality/valueThis paper extends the prior literature on corporate governance and financial internationalization by investigating the latter on a perspective of firms from an emerging market. The empirical evidence section provides support for the argument that the simultaneous presence of foreign actors in multiple mechanisms of the corporate governance structure impacts the performance of emerging market firms.

Excluded or Embraced: How Do Multinationals Lobby in Eastern Europe?

The paper investigates the lobbying strategies of multinational corporations’ subsidiaries in Hungary. Previous research has shown that the unique lobbying style of post-socialist interest groups and firms is not compatible with the EU’s multi-level lobbying system. However much less attention has been devoted to the question of how multinationals lobby in Eastern Europe. To understand how institutional complexity in a post-socialist context affects MNE strategy development, it is necessary to examine how the institutional context of the host country and the internal institutional pressures of the parent company affect subsidiaries’ lobbying activities. The article makes a theoretical connection between the literatures on corporate lobbying, institutional duality and organizational capability in order to reveal how political capabilities are organized in an emerging host country context.