Institutional Voids Research Articles

액셀러레이터: 개념화와 향후 연구과제

Since the foundation of Y Combinator in 2005 and Techstars in 2007, startup accelerators have rapidly emerged as a new form of organization in the startup ecosystem. In Korea, Primer was founded in 2010 as the first startup accelerator and was then followed by other early accelerators. The recent government certification of accelerators has since triggered the rapid spread of accelerators. However, despite this rapid diffusion of accelerators, there is a paucity of research. This paper seeks to offer a conceptual model as to how accelerators add value. It also provides suggestions for accelerator design, public policy and future research. Accelerators can mitigate institutional voids that hinder the creation and success of startups. They also assist startups to gaining access to human, social, and financial capital by offering education programs, mentoring service, networking opportunities, and demo days. In addition, mentoring helps startups to test key assumptions and receive feedback on their ideas and business models. In doing so, startups can evaluate their ideas and business models more objectively and from diverse perspectives, mitigating problems stemming from the overconfidence and inexperience of entrepreneurs. After a brief review of the history of accelerators, the paper delineates the sources of high failure rates of startups, explaining how accelerators add value by mitigating the difficulties associated with startups and how the characteristics of entrepreneurs, startups and ecosystems affect the value-added roles of accelerators. The paper concludes by offering implications for theory, practice, and public policy and by providing future research suggestions.

The Influence of Environmental Factors on Product Innovations in Emerging Markets: The Institutional Theory Perspective

This study addresses how environmental factors in emerging markets affect product innovation properties, categorized as frugality, sociality, and technological sophistication. A questionnaire survey among Japanese overseas subsidiaries in 13 emerging countries was conducted to collect data on environmental factors and new product innovation characteristics. Hierarchical OLS regression analysis was employed to estimate the influences. The results reveal that companies in emerging markets tend to adopt frugality, sociality, and technological sophistication innovation when consumers have low purchasing power, institutional voids exist, and resources are available, respectively. Traditional innovation literature has been built on the assumption of consumer affluence and resource abundance. However, the findings might not apply to the context of emerging markets owing to environmental constraints in these markets. This study is the first to empirically show the influence of environmental circumstances on firms' innovation strategies. The issue of generalizability may exist because of the limited number of samples collected from firms originating in one country (i.e., Japanese overseas subsidiaries). However, this study provides a framework to better understand how the innovation decisions of firms operating in emerging markets may vary depending on environmental factors. This study provides critical insights into how firms should adapt their innovation strategies to the market environment.

A causal model for creating public value (in institutional voids)—the case of Lesvos

The Greek island of Lesvos is a holiday destination that became the main entry point for forced migrants to Europe during 2015 and 2016. These circumstances of disruptive societal change are used as the basis for developing a causal and dynamic model that creates public value in institutional voids.The clash between a holiday location and a humanitarian-ecological disaster and the fact that volunteers were the frontline response at the border of the EU in a politically complex situation made this, at the time, a very special case. The attention of celebrities and the media, Lesvos’ geographical proximity to Turkey, the historical conflicts between the two neighbouring countries, the lack of interaction between local people and the involvement of international NGOs spurred conflicts between various actors, causing social fragmentation on the island.The model identifies the core aspects of strengthening social capital and building trust to counter such societal fragmentation. Following Archer’s morphogenetic approach as a meta-concept, and the identification of causalities for understanding the social dynamics on Lesvos as a starting point, an extended version of Moore’s public value concept was used to build the empirical basis for the development of the model.The model presented can be used to distinguish between three very separate pathways of creating public value. I call this public value (PV) outcome creation. These pathways are described separately by using causal loop diagrams (CLDs). When aligned, they suggest a causal understanding of how adaptive leadership and collaborative governance can be a core element and a generative mechanism of social change that creates public value.Although the paper draws on a case study that is relevant to migration studies, it is not a migration study, but rather an attempt to use and improve “social-theory reflection” by applying a systems thinking approach as we embark on addressing public value creation, social problems and social-systems transformation (in institutional voids).

Institutional Voids and Entrepreneurial Responses to a Societal Crisis

This paper assesses how societal disruptions lead to collective action that addresses institutional voids. Examining field data from Sweden’s response to the Covid-19 outbreak, we track institutional voids related to four product market categories. We construct a process model and elaborate on what we conceptualize as entrepreneurial constellations, which consist of collaborating business firms, public organizations, and the government. These entrepreneurial constellations facilitate the functioning of markets or forming of new ones to deal with a disruption. Through collective action, constellations coordinate problems and self-interest to overcome regulatory obstacles. Findings point to institutional voids that relate to surges during the need to scale up existing critical product markets, creating and innovating new critical product markets. Recognizing such institutional voids helps constellations coordinate expertise that collectively enacts regulatory changes and innovation in coordinative functions. While emerging, they accomplish ongoing evaluative reflections that permit them to autocorrect. This new conceptual understanding of the surprising presence and consequences of institutional voids in market economies, where they are not expected to develop and cause insufficiencies and suffering, explains how entrepreneurial constellations improvise solutions to societal disruptions.

How Do SMEs Survive Institutional Voids? The Role of Innovation (WITHDRAWN)

Economies fall short to varying degrees in providing the institutions necessary to support market mechanisms. These limitations, known as institutional voids, are generally thought to reduce the effectiveness and performance of firms operating in such environments. To explain how firms, deal with institutional voids, scholars have pointed to various strategies such as corporate social responsibility (CSR), internalization, information substitution, institutional borrowing, and signaling. These resource-intensive strategies are utilized primarily by very large firms. SMEs have limited resources that reduce their degrees of freedom for enacting such complex strategies. Given the significant contribution of SMEs to worldwide businesses, employment as well as national income, particularly to the emerging economies, it is important to understand their strategies in overcoming institutional voids. We suggest that SMEs will be more likely to undertake innovation to deal with institutional obstacles. Findings highlight the importance of innovation for SMEs even in environments thought to have less developed innovation-supporting systems. The connections we demonstrate between SMEs, institutional voids and innovation are new to the literature.

Institutional Voids and Innovation

Economies fall short to varying degrees in providing the institutions necessary to support market mechanisms. These limitations, known as institutional voids, are generally thought to reduce the effectiveness and performance of firms operating in such environments. To explain how firms, deal with institutional voids, scholars have pointed to various strategies such as corporate social responsibility (CSR), internalization, information substitution, institutional borrowing, and signaling. These resource-intensive strategies are utilized primarily by very large firms. SMEs have limited resources that reduce their degrees of freedom for enacting such complex strategies. Given the significant contribution of SMEs to worldwide businesses, employment as well as national income, particularly to the emerging economies, it is important to understand their strategies in overcoming institutional voids. We suggest that SMEs will be more likely to undertake innovation to deal with institutional obstacles. Findings highlight the importance of innovation for SMEs even in environments thought to have less developed innovation-supporting systems. The connections we demonstrate between SMEs, institutional voids and innovation are new to the literature.

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

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.

The Threshold-Level Determinants of Social Entrepreneurial Activity

Market failures and governmental inadequacies often result in activities related to social entrepreneurship. If this is the case, why and how do social entrepreneurial activities (SEA) exist in developed countries like Norway, Switzerland or USA where macro-level factors are conducive to organised and efficient business and entrepreneurial practices? Additionally, since social entrepreneurship is expected to exist among institutional voids and BOP markets, SEA should occur in abundance in developing or least developed countries due to their fractured economic, cultural or socio-political structures. The purpose of this paper is to incorporate Companys and McMullen’s (2006) distinctive framework based on supply and demand side theories on entrepreneurial opportunities to empirically test the macro-level factors that stimulate or impede SEA. By employing a number of robust empirical tests across fifty-three countries, this study makes theoretical and practical contributions by proposing that in addition to the existence of certain institutional voids and BOP markets related to weak governance, unpredictable GDP, wealth disparity and lack of personal freedom, a minimum threshold level of economic, cultural or socio-political infrastructure is often necessary in a country for an unstinted amount of SEA to occur. Theoretical and practical implications as well as limitations are discussed.

The Impact of Local Networks on Subsidiary Performance

This study investigates how institutional voids attenuate the impact of business network characteristics of foreign subsidiaries on sales performance by examining: first, we decomposed the network range/strength into three dimensions in terms of technology, marketing, and supply chain to investigate the full picture with in-depth analysis; and second, by exerting each component of network range/strength with the regulative, cognitive, and normative institutional void scenario separately, our empirical results echo the recent call of conflicting findings may create the theoretical advances. Based on a sample of 274 Taiwanese manufacturing multinational corporations (MNCs) making foreign direct investments (FDI) in emerging markets. Our findings reveal that the same cognitive and normative institutional voids in the host country, which enhance the impact of marketing network range/strength can reduce the impact of supply chain network range/strength on sales performance of Taiwanese subsidiaries in China.

Overcoming Institutional Voids: International Institutions and the Investment Climate

Firms in many emerging markets face significant institutional voids. To overcome the liabilities of weak domestic institutions, some states (not firms) participate in international institutions, trading sovereignty for institutional credibility. We examine whether states’ compliance with international institutions impacts firms’ assessment of the domestic investment climate. Focusing on the global investment treaty regime that allows firms to bring legal claims for alleged property rights violations against sovereign states, we argue that a ruling in favor of the state by a neutral international body will be perceived by observer firms as a legitimating symbol of stronger property rights and domestic courts. In contrast, a ruling against the state leads to firms assessing domestic legal institutions as more challenging. By comparing 14,338 firm responses across 16 countries prior to and after a tribunal ruling, we find support for the hypothesized effect of international institutions. We further find that the effects are conditioned by whether the observer firm is in the same industry as the litigant firm and whether it is a foreign firm. These findings suggest an alternate pathway by which firms can overcome institutional voids in emerging markets.

Logics of Digital Space, Informality and Women Entrepreneurship

This paper explores the role of digital space in enabling women’s informal entrepreneurship in developing economies that are mostly riddled with institutional voids. It is based on an in-depth study of forty-seven (47) women informal entrepreneurs from Karachi, Pakistan. We utilize the institutional logics perspective to explore the voids women informal entrepreneurs face in their businesses and the resolution of these voids through the interaction of pre-existing institutional logics and emergent digital logics. The findings of this research show dominance of patriarchal logic and active utilization of digital logics to overcome it. From our data, we abstract digital logics of flexibility, affordability, spreadability, and connectivity as well as their interaction with dominant patriarchal logic that result in transposing and diffusing practices for women informal entrepreneur. This research contributes to the literature by examining how digital space amalgamates into business operations enabling women’s informal entrepreneurship.

Role of “Indianness” in International Location choice – The effect of religion and langauge

Unlike other countries’ firms that have undergone the path of liberalization since the 1990s, Indian Multinational Enterprises (MNEs) have registered exceptional cross-border activities. Originating from the institutional void, a large majority of successful Indian MNEs are generally part of a single business family’s portfolio of businesses, commonly known as business groups (BGs). MNEs are embedded in their home country environment before their internationalization. Thus, acknowledging the role of home country institutions in shaping the culture of the organization, we adopt the concept of “Indianness” and unpack it in the form of linguistic and religious diversity which shapes the organizations in their formative years. This study aims to understand the impact of Indianness on the foreign location choice of the most deeply entrenched organizational forms, that is, the Indian BGs. Here we show that Indian firms prefer to internationalize to nations that are least distant linguistically and religiously and have a less diverse set of languages and more diverse religiously. Additionally, as the religious distance seems to dissuade the location choice in high distant nations, international experience gained by the same BGs’ affiliate in the same or psychically similar host nations aids in choosing religiously distant nations. These results are contrary to the belief that high religious or linguistic distance dampens the prospects of foreign location choice. This study also highlights the role of prior experience in the same or psychically similar nations in aiding the reduction of the negative impacts of religious differences. This study brings to fore the importance of home country (informal)institutions or as we term them Indianness in the case of Indian MNEs internationalization.

Trust: Boundary Conditions for CSR on Firm Performance in Emerging Economies

Does doing good improves firm performance in emerging economies that are characterized by institutional voids? In any social structure, trust is the core mechanism that facilitates cooperation and coordination between two parties and facilitates the transition from informal institutions to formal institutions in emerging economies. Social trust shapes expectations on the outcome of interactions within the community and business transactions. High trust in government lubricates the effectiveness of changes in law and regulations, whereas low trust impedes government reforms. Low trust in government reduces the likelihood of stakeholders’ dependence on the government to meet their demands. Using panel data from 1,315 firms from the period 2007 to 2018, this paper found that under the condition of low government trust and social trust, the positive signaling effect of CSR is strengthened, and improves firm performance. While trust does not directly affect firm performance, it moderates the stakeholders’ reception of firms’ signals sent via CSR.

Market Conditions and the Labor Productivity Advantage of Business Groups

Using a large sample of firms from 208 subnational regions across 21 European countries, we investigate if labor market conditions affect the potential value of internal labor markets in business groups—i.e., set of firms under common ownership and control. Building on the “institutional voids” perspective on business groups and the strategic human capital literature, we theorize that slack labor market conditions facilitate and enhance the value of labor reallocations within these interfirm networks by inhibiting trade in human capital outside them. In these environments, we find that firms with internal labor market access—i.e., with an increasing number of sister companies in the same region-industry—show relatively higher labor productivity. Further, our findings suggest that the labor market frictions arising from both slack labor market conditions and employment protection regulations synergize to enhance the benefits of internal labor markets.

Institutional Voids and Business Model Innovation in Africa: The Role of Nonmarket Market Strategy

Institutional Voids and Business Model Innovation in Africa: The Role of Nonmarket Market Strategy

The Privileged Rush In? Relational Ties and Starting Up Formal in an Emerging Economy

Why do entrepreneurs in emerging economies choose to start their business in the informal sector? The frequency with which growth-oriented emerging economy entrepreneurs make this decision contradicts conventional wisdom and economic and institutional theories, all of which posit that registering with government conveys much-needed legitimacy and access to external resources. Recent research, however, suggest that entrepreneurs can use the informal economy as safe ground within which to build up internal capabilities before registering with the government. In this paper, we resolve these competing views by proposing that the promise of formality at startup varies with firms’ relational resources for filling institutional voids. Using a nationally representative, pooled cross-sectional dataset of firm survey responses in Vietnam, we show evidence that initial informality positively affects firms’ performance post-formalization. More importantly, we find that it is firms that are large, politically connected, and male-owned that benefit from immediate registration.

Determinants of Director Remuneration: Monitoring Human Capital and Social Embeddedness

The determinants of director compensation have been studied across the theoretical spectrum with varying findings. Agency theory suggests that monitoring human capital enhances the ability of the individuals to be effective monitors and should be associated with higher director compensation. At the same time, social embeddedness impedes the ability to monitor, and it should be associated with lower director compensation. In contrast, behavioral theory of corporate governance suggests ingratiating behavior and social embeddedness of directors increases their likelihood of higher value, and thus it should lead to higher director compensation. We attempt to reconcile these contradictory predictions of the agency theory and behavioral theory of the firm. We examine the same through the labor market for directors in India using a unique longitudinal dataset of director appointments and compensation in India over 2007-2016. We also exploit a natural experiment brought about by the implementation of the significant corporate governance reforms (Companies Act of India, 2013) to test the labor market norms posited by agency theory versus the behavioral theory of the firm. The finding of our study indicates the importance of monitoring human capital and social embeddedness as they positively affect directors' compensation. Our results also highlight that in emerging market contexts marked by the presence of institutional voids, when the implementation of corporate governance reform increases the risks for individual directors on account of corporate misconduct, they respond by optimizing their structural positions in the interlock network by increasing their reach but reducing their influence/salience in the network.

Unpacking the Relationship between Corporate Research Labs & Firm Performance

What effect does investment in R&D have on firm performance? The papers in this symposium consider a particular form of R&D investment— namely, corporate research laboratories, seeking to unpack the relationship between the firms’ use of corporate research labs to pay- offs to R&D investments. Each paper in the symposium presents a different lens on how corporate research laboratories create value for the parent firms. Arora, Belenzon, Kosenko, Suh and Yafeh argue that corporate research labs can fill institutional voids. Knott and Vinokurova document persistence of corporate research labs over time and the labs' negative impact on research productivity. Martins and Soares investigate whether firms are able to retain the knowledge generated after the labs shut down. Finally, Arts, Cassiman, and Hao develop a new measure for the degree to which R&D investment translates into technological differentiation and show that such differentiation is especially valuable in markets characterized by product competition and high R&D intensity. Unpacking the Relationship between Corporate Research Labs and Firm Performance Presenter: Natalya Vinokurova; The Wharton School, U. of Pennsylvania

Smart Disclosure: An Enabler for Multinationals to Promote Suppliers’ Human Rights Commitments

Human rights violations remain an urgent global grand challenge, and multinational enterprises (MNEs) face increasing pressure to address them in their global supply chains. Drawing insights from the information as regulation literature, we propose that MNEs’ smart disclosure (i.e., disclosure enabled by smart technologies with enhanced reprogrammability, accessibility, interactivity, and transferability) of supply chain information promotes suppliers’ human rights commitments. We theorize that through smart disclosure, MNEs can enlist all relevant stakeholders to influence and support suppliers to solve human rights issues through a “crowdsourcing” approach. Furthermore, we argue that the information conditions in global supply chains serve as important boundary conditions. Specifically, the relationship between MNEs’ smart disclosure and suppliers’ human rights commitments is weakened for suppliers with stronger relational embeddedness with MNEs (i.e., internal information condition). The relationship is also weakened for suppliers located in countries with greater institutional voids (i.e., external information condition).

Social Entrepreneurs’ Agency in Complex Institutional Environments of Emerging Economies

Entrepreneurial agency in complex institutional environments and the extent to which varying perceptions of institutional catalysts and impediments affect social entrepreneurs’ navigation approaches in emerging economies remain untold. Based on an abductive analysis of 33 interviews with social entrepreneurs and hub representatives in sub-Saharan Africa, our findings point to distinct approaches that social entrepreneurs apply. We illustrate these approaches and corresponding techniques by drawing on selected cases with a specific emphasis on informal institutional catalysts and impediments. Through a contextualized micro lens on institutional theory, our findings enrich the social entrepreneurship literature in relation to institutional voids and entrepreneurial agency.