Institutional Voids Research Articles

Business groups and firm-specific characteristics: influences on entrepreneurial orientation

PurposeThe purpose of this study is to investigate the impact of business group (BG) affiliation on affiliated firms' entrepreneurial orientation (EO). The authors further investigate the possible contingent factors affecting this relationship – the age of BGs and the affiliated firm’s external linkages (ratio of external to in-house interlocks) on the relationship in an emerging market context.Design/methodology/approachThe study employs a dynamic panel data framework using the system-generalized method of moments (Sys-GMM) on a sample of 670 NSE-listed Indian firms during the 2006–2019 period. EO is measured through content analysis of the letters to shareholders (LTS) issued by the companies between the period 2006 and 2019.FindingsBG affiliates have more EO than standalone firms, as affiliates can access group-wide resources and capabilities apart from firm-specific resources. Affiliates of older BG have less EO since they are more entrenched in the institutional settings of their BG. Affiliates with more external linkages of board members will have a higher level of EO, as such linkages would subside inertial tendencies by exposing them to novel sets of information, resources and strategic practices. Further, the negative effect of BG age on EO is countered by external linkages. Overall, the study shows that the effect of group affiliation is not uniform and is contingent on the factors we have theorized and tested.Originality/valueThe paper proposes the resource-based view and the institutional void theory as likely candidates for explaining the contribution of BGs towards the EO of its affiliates, especially in the context of emerging markets. The contingent role of BG age highlighted in the paper forewarns managers about the importance of establishing internal mechanisms to preserve the EO in affiliates. Our findings about the positive role played by external linkages of the board members provide one such mechanism that can be leveraged to enhance affiliated firm’s EO.

The influence of institutional void and socio-cultural factors on the internationalization of emerging multinationals

The process of firm internationalization involves critical decisions regarding location, entry mode, investment levels, and the management of foreign operations. This paper examines the effects of institutional voids and socio-cultural factors on the internationalization of Emerging Multinationals (EMNCs) from the BRICS and MENA regions. We draw on institutional and internationalization theories to explain how socio-cultural factors influence the internationalization of EMNCs. Using the two-step system GMM over a ten-year period (2012–2021), we find that institutional voids, religious diversity, power distance, and a firm’s ESG practices at home positively impact internationalization. These findings contribute to the literature by quantifying key variables related to internationalization, cultural diversity, institutional voids, power distance, and ESG engagement.

How Do New Forms of Organizations Manage Institutional Voids? Social Enterprises’ Quest for Sociopolitical Legitimacy

This study draws on institutional theory to provide insights into how new forms of organizations gain legitimacy under institutional voids. Based on interviews with leaders of 42 Chinese social enterprises (SEs), we find that dominant stakeholders—the state—are ambivalent about new ventures’ agendas and practices, which is displayed in their being sometimes supportive and other times skeptical, even hostile. SEs favor the contingent engagement political strategy to develop mutually beneficial relationships with the state while keeping a healthy distance. This enables them to gain sociopolitical legitimacy in a nonthreatening and acceptable way for survival and growth. The findings further highlighted the individual, organizational, and environmental factors that condition SE legitimation approaches, including the form of state control, leaders’ political capital, organizational social mission, and regional political environment. This study makes theoretical contributions to the institutional and SE literatures, highlighting stakeholder ambivalence as an essential characteristic of an institutional context fraught with institutional voids.

Entrepreneurial alertness: A mechanism for innovation and growth in an emerging economy

AbstractIn this study, we draw from the conservation of resources theory to develop and test a model on the processes through which resiliency influences two entrepreneurial strategies, product differentiation and international diversification. Results from 226 entrepreneurs in Pakistan demonstrate that psychological resiliency predicts product diversification and international diversification through entrepreneurial alertness. Also, we find that institutional voids moderate the relationship between entrepreneurial alertness, product diversification, and international diversification. Our theorizing advances entrepreneurial alertness as a lynchpin variable for operationalizing founders’ characteristics to affect innovation and expansion efforts. Furthermore, by demonstrating the complementary effect of institutional voids on the entrepreneurial alertness–product differentiation and entrepreneurial alertness–international diversification relationships, we draw the attention of entrepreneurs to the brighter side of institutional voids. This is an important addition to international entrepreneurship literature and a critical contextual contribution to entrepreneurial alertness theory development because limited attention is devoted to examining how resiliency promotes entrepreneurial alertness for facilitating product differentiation and international diversification strategies in the Asia Pacific region.

Exploring institutional dynamics in a multi-level analysis in Southeast Europe

ABSTRACT The European Union (EU) integration process of transition economies from Southeast Europe has faced significant political and economic challenges. Two decades in, these challenges persist, leading to slower-than-expected economic development and fostering local frustration, nationalism, populism, and migration flows. This article aims to disentangle the institutional complexities in these regions. Using an exploratory, inductive approach based on 30 qualitative interviews across three Southeast European countries, the research conducts a multi-level analysis. The findings reveal that complex institutional settings are characterised by institutional voids and asymmetries stemming from the transition process and EU integration. The perception of the overall institutional setup is central, negatively influenced by institutional voids and asymmetries but positively impacted by participatory law-making approaches. Additionally, competing institutional logics on the micro-level influence companies’ perspective. This article provides insights into the institutional challenges faced by companies in transition economies, crucial for policy formulation and development projects in the context of EU integration. The key takeaway emphasises the importance of well-designed participatory policymaking, highlighting the need for careful preparation and a foundation of trust.

Are We All in This Together? Examining Nonprofits’ Perceptions of Governmental Actors in the Management of the U.S. Refugee Crisis

Abstract U.S. federal policy has created, at best, a gap and, at worst, a hostile environment for nonprofits serving refugees. We rely on frameworks of nonprofit-government relationships (institutional voids, structural holes, instrumental/expressive support) to explore government-nonprofit interactions in the refugee domain, and their impact on 34 refugee-serving nonprofits in the U.S. Findings indicate limited expressive and instrumental support for nonprofits and suggest nonprofits must navigate complex, multilevel, environments. Contributions include the suggestion of “intentional” rather than institutional voids, and a new typology of forms (zero, unclaimed, symbolic, or comprehensive) of government support for nonprofits in a problem domain based on whether government’s instrumental and expressive support for nonprofits is high or low.

IoT appropriation for crop management and productivity enhancement in South Africa

Background: While the Internet of things (IoT) has been praised for its potential to improve food security and combat climate change, it is unclear how agricultural entrepreneurs (especially farmers) in emerging contexts are harnessing this technology to leverage agricultural productivity.Objectives: Given the lack of documentation of novel-technology-supported farming approaches in relevant extant literature in emerging economies, this study sought to explore how South African farmers are harnessing the strength of IoT to leverage productivity in crop farming.Method: To address this research gap, a systematic literature review was conducted to establish how IoT was implemented in crop farming in resource-constrained contexts of South Africa. These databases, namely Google Scholar, Scopus, MDPI, IEEE Xplore, and Science Direct, were utilised to gather the relevant information.Results: The findings highlighted that IoT technology presented multiple opportunities for improving operational efficiency and connectivity and facilitating remote management of agricultural activities. Conversely, the findings suggested that the utilisation of IoT in crop farming poses serious challenges arising from software complexity, data security, lack of supporting infrastructure and technical skills.Conclusion: This article demonstrates how institutional voids, human capital and technological gaps in the South African farming industry undermine crop farming, food security in the communities and government efforts at promoting the latest technologies for leveraging agricultural productivity and the farming industry in general.Contribution: The study has contributed to filling the gap in the IoT literature in South Africa and worldwide. This study also contributed by aligning the theory to the study.

Institutional Impact on Corporate Discourse Decoupling and Institutional Void on Tailing Dam Failure

Institutional Impact on Corporate Discourse Decoupling and Institutional Void on Tailing Dam Failure

Government-Led digital transformation in FinTech ecosystems

In this paper, we report on a qualitative exploratory case study of a national-level government-led digital transformation. We depart from most studies on government digital transformation that largely focus on improving existing services, bureaucratic processes, or adopting emerging digital technologies. Instead, we analyze the process of a government-led digital transformation aimed at addressing significant institutional voids within a resource-constrained context. Drawing from 60 interviews with stakeholders in the Ghanaian FinTech ecosystem, we theorize the concept of digital branching strategy as an alternative lens to envisage government-led digital transformation that considers the resource-constrained context and characteristics of governments. Our findings show that governments, especially those in resource-constrained contexts pursue digital transformation through exploring frugal innovations and leveraging established resources, structures, and relationships within an ecosystem. We subsequently develop a process model to explain the mechanisms of a national-level government-led digital transformation. Based on the findings and the model, our study offers critical insights to re-imagine government-led digital transformation in resource-constrained contexts by demonstrating how pursuing a digital branching strategy leads to planned and emergent outcomes because of the generative nature of the transformation.

Institutional Voids Effects on Risk Management: Mining Companies Managing Tailing Dam Failures Risks

Institutional Voids Effects on Risk Management: Mining Companies Managing Tailing Dam Failures Risks

Dealing with adversity: innovation among small and medium-sized enterprises in developing economies

PurposeSmall and medium-sized enterprises in developing countries, particularly in the Sub-Saharan African region, find it hard to innovate due to severe resource constraints and high institutional voids. Given this, the paper examines three international strategic responses that small and medium-sized enterprises in Sub-Saharan Africa adopt to implement innovations in the face of weak institutional environments.Design/methodology/approachUsing comprehensive data from the World Bank Enterprise Survey, the study applies the Instrumental Variable Probit approach to analyse a sample of 8,466 SMEs from eleven countries in the Sub-Saharan African region.FindingsThe empirical results show that foreign ownership negatively affects product and process innovation. Additionally, the results reveal that small and medium-sized enterprises that leverage exporting and international quality certifications are likely to implement innovations.Originality/valueThe paper contributes to the literature by suggesting that small and medium-sized enterprises must exploit strategic alternatives to improve their innovation efforts when operating in a weak institutional environment. Thus, by exploring international strategic responses to institutional difficulties when implementing innovations, this paper goes beyond the prevailing research approach in developing countries that mainly emphasises the barriers to innovations.

Base of the chain (BoC) sourcing challenges: The role of institutional voids and social agency problems

Due to various factors, including the institutional context of suppliers, the successful implementation of sustainability initiatives remains a persistent challenge for purchasing and supply management (PSM) professionals. Sourcing from the Base of the Chain (BoC) requires buyers to be cognizant of and assess challenges inherent in engaging with the Bottom of the Pyramid (BoP) institutional context. Designing governance structures that facilitate the simultaneous pursuit of economic and social goals demands a thorough understanding of these challenges and their contextual antecedents. The literature has addressed institutional voids and incompatibilities between buyer-BoC supplier institutional contexts as critical factors informing interventions aimed at overcoming sourcing challenges. Drawing upon social agency theory, our study advances these debates. We argue that the broader institutional and social context serves as the contextual antecedents to principal-agent (P-A) relationships established between buyers and their BoC suppliers. This perspective provides a more enriched explanation for the antecedents of BoC sourcing challenges. We draw on a multiple case study incorporating 31 interviews and archival data of five BoC sourcing programs within the Australian agribusiness sector. Our findings shed light on how BoC institutional voids cause BoC sourcing challenges across supplier and product domains by inducing hidden information, hidden action, and hidden logic as social agency problems. Hidden logic, a new type of social agency problem identified in our study, refers to the agents' socially constructed sets of assumptions, values, beliefs, and traditions that are invisible to the principals. Consequently, we present insights into why governance structures addressing BoC sourcing challenges may vary across institutional contexts, providing practical guidance for buyers in developed economies concerning the subsequent design and execution of effective BoC sourcing strategies.

Analyzing transformational role of black women entrepreneurs in Brazilian beauty sector

PurposeThis study aims to explore the concept of transformational entrepreneurship (TE), which is relevant in emerging economies such as Brazil with its elevated level of unemployment, taxes and interest rates along with elevated levels of institutional voids, and how firms are including purpose as part of their goals and strategies.Design/methodology/approachThe study is based on a multiple case study of six Afro-entrepreneurs, participants of a consulting project from Sebrae, the Brazilian Micro and Small Business Support Service, a private entity that promotes the competitiveness and sustainable development of micro and small business enterprises (Sebrae, 2022).FindingsThis work studied the transformational power of entrepreneurship and how six beauty salons led by black women have the ability to not only generate income but also contribute to social and cultural aspects.Practical implicationsThis work demonstrates how TE has the potential to improve the lives of a population that has historically been marginalized and faces the lived consequences of socioeconomic discrimination.Originality/valueThis paper provides valuable contributions through a case study of transformational, ethnic and women’s entrepreneurship, not very explored in the literature.

Institutional voids and business model convergence in the recycling industry

Considering that recycling is seldom economically viable, this study analyzes how recycling organizations perceive institutional voids and adapt their business models to propel a transition from waste crisis to establishing waste management services. The analysis is embedded in the sustainability transitions literature and is approached from an institutional void and business model lens. Qualitative research was conducted with 23 organizations in the recycling industry of Lebanon. The main findings revealed that public voids mainly cause constraints with few exceptions of opportunities, whereas some market voids are perceived as constraints at times and opportunities at others, and coping with these voids leads to a convergence of business models. This study contributes to business model adaptation by examining its role in the transition process and to sustainability transitions research by focusing on how niche-level actors introduce waste management services that are otherwise the regime's responsibility.

Sphere transgressions in the Dutch digital welfare state: causing harm to citizens when legal rules, ethical norms and quality procedures are lacking

ABSTRACT Welfare states across the world increasingly experiment with the use of big data and algorithms in the name of efficiency gains and fair decision-making. However, recent public scandals in various countries show persistent problems with how digital welfare states operate at the cost of vulnerable populations. Problems include systemic forms of discrimination, increasing levels of surveillance, stigmatization, and restricted access to public benefits. Rather than viewing these problems as instances of technical implementation hurdles, we argue that digital welfare states currently operate in an institutional void in which legal, ethical, and quality procedures are lacking or ill equipped to address new challenges posed by digital technologies. Based on a secondary analysis of documents, we show how this institutional void empirically manifests itself in the Dutch welfare state by zooming in on two subcases that sparked public controversy in recent years: the childcare benefits scandal that focused on fraud detection and the Top 400/Top 600 that was set-up with the aim of crime prevention. By analyzing these cases, we show how sphere transgressions – understood as the encroachment of digital logic into the sphere of social welfare – can have detrimental consequences for citizens when there is an institutional void. We end with reflections on how to fill the current institutional void and identify ‘soft signals’ that could be used as pointers to recognize the potential undesirable consequences of new sphere transgressions.

A double‐edged sword: Interim CEO and corporate social (ir)responsibility activities

AbstractEmploying an interim CEO is one of the key strategies organizations use to address urgent changes in leadership, yet there is a notable lack of attention in existing corporate governance literature regarding their impact on non‐market strategic behaviors. In an effort to bridge this gap, our study integrates institutional theory with impression management literature. Based on unbalanced panel data from Chinese non‐state‐owned listed companies from 2010 to 2019, the study finds that the succession of an interim CEO is associated with a simultaneous reduction in both corporate social responsibility (CSR) and corporate social irresponsibility (CSI) activities. The negative relationship between interim CEO and CSI activities is weaken in the context of high institutional voids. Mechanism analysis reveals that interim CEOs tend to focus more on the present and allocate more attention toward external stakeholder management strategies and low‐cost and efficiency strategies. Additional analysis indicates that in the face of negative financial performance aspirations, interim CEOs are more likely to reduce CSR activities. Similarly, when confronted with negative social performance aspirations, interim CEOs tend to decrease CSI activities to a greater extent.

Examining the impact of pacification on informal entrepreneurs in Brazilian favelas

ABSTRACT Drawing on formal and informal institutional voids and disadvantage theory, we ask whether exogeneous reduction in crime improves the outcomes of informal self-employment. Using fixed-effects individual slopes (FEIS) by individual and by the policing unit, self-employed in favelas had a lower yearly income (139.27 BRL a year [~28 USD], or 4.66% below average annual income) than those living immediately outside of favelas, however, income improvements were not realized by those living favelas. With a monthly income of 11 USD for poor in Brazil, the annual USD 28 difference translates to about 2.5 months of income loss. The findings do not vary by demographics and do not indicate meaningful impact on living standard. To assess longer term aggregate effects, using night-time lights at the zip code level, a higher percentage of self-employed in a zip code lower aggregate income but do not improve wealth index. The findings show that institutional effects of poverty in favelas are deeply rooted and difficult to overcome with crime reduction.

Exploring the motivating factors for opportunity recognition among social entrepreneurs: a qualitative study

PurposeThis paper explores the motivating factors that lead to opportunity recognition among social entrepreneurs in India.Design/methodology/approachThe study followed an exploratory, qualitative design based on thematic analysis of the interview data collected from 13 Indian social entrepreneurs.FindingsThe study identifies two aggregate factors that motivate social entrepreneurs: personal and contextual. Personal factors include life experiences, social awareness, social inclination since childhood, spiritual motives, the need for a meaningful career and entrepreneurial intention. Contextual factors included institutional voids, community development, the presence of a role model and volunteer experiences.Research limitations/implicationsThis study contributes to the social entrepreneurship literature by providing a model for motivating factors that lead to opportunity recognition. This study enables policymakers and social entrepreneurship educators to identify aspiring social entrepreneurs and provide target-specific support to them.Practical implicationsThis study enables policymakers and social entrepreneurship educators to identify aspiring social entrepreneurs and provide target-specific support to them.Originality/valueThe study uniquely contributes to the social entrepreneurship field by offering deep qualitative insights into the motivational and opportunity recognition patterns of social entrepreneurship.

Investigating ISA adaptation in a developing country context: the selective influence of Big Four affiliates

ABSTRACT This paper examines how the national process of adapting the International Standards on Auditing (ISAs) unfolds in developing countries, focusing on the case of Egypt. The study relies on data gathered from 33 semi-structured interviews with government officials and senior auditors alongside documentary evidence. Our findings show how legacy state institutions that were involved in the national standard-setting committee have largely fallen short of their aspirations to align local auditing standards with the expectations set out in the ISAs. The lack of a coherent approach to developing state policy objectives, resources, and public consultation, together with technical demands and translation difficulties, hampered the process. Such weaknesses provided an opportunity for the local Big Four affiliates to become deeply involved. The firms’ strategic manoeuvres were driven not only by a material desire to protect their market position/status but also by a commitment to a perceived national duty to support government attempts at national standard-setting. Importantly, our findings reveal the selectivity of such interventions and the differential impact of ISA adaptation on the diverse constituency of audit firms. Theoretically, we propose the institutional void perspective to conceptualise the intervention of private actors as well as to articulate the elements of a void in an audit regulatory process. While Big Four firms typically seek to position themselves in such processes, we argue that international reforms and policies should focus on fostering a more inclusive, accountable, and deliberative system that promotes the presence of diverse, independent and representative local audit actors.

The Effect of Institutional Voids, Informal Institutions, and Institutional Tension on Escaped-Based Internationalization from Developed Countries

ABSTRACT Literature on firm internationalization has predominantly examined host-country determinants while largely overlooking home-country environments. Existing theory on home-country institutional voids has been limited to emerging markets, positing that the absence of formal institutions influences organizational strategy. We extend this theory by incorporating developed market multinational enterprises, informal institutions, and institutional tension. We propose and find that a formal void related to labor laws is positively associated with internationalization, whereas an informal institution related to worker collectivism is negatively related to it. We also suggest, and partially find, that interaction between these conflicting forces mitigates their effects.