Session 385

Multinational firms and the External Environment: The Role of Institutions

Track G

Date: Tuesday, September 23, 2014


Time: 15:30 – 16:45

Common Ground

Room: Glasgow


  • Raveendra Chittoor, University of Victoria

Title: An Organizational Perspective of Wasta


  • Musab Almutawa, IE Business School

Abstract: Wasta is the use of a mediator to acquire an advantage or to speed an undertaking usually in relation to government authorities in the Arab World. Though understudied, wasta is essential to understanding decision-making in the Middle East. This conceptual paper aims to bridge the gap between wasta and organizational theory by investigating the factors that explain the institutionalization of wasta usage by firms in the region, and what firms, including MNEs, can do to better leverage the use of wasta. Drawing on institutional and social capital perspectives, it is argued that as isomorphic pressures and organizational social capital increase, the use of organizational wasta by firms also increases. Furthermore, wasta usage depends on familiness, prior usage of wasta, and organizational cooperation.

Title: Institutional Resources as a Double-Edged Sword: Evidence from the Indian Textile Firms


  • Raveendra Chittoor, University of Victoria
  • Preet Aulakh, York University
  • Oana Branzei, University of Western Ontario

Abstract: In an era of global competition, there is a growing interest within the strategy field to study how the institutional environments influence firm strategies and competitive advantage. In this paper, we further this research by examining how institutional stimulus through a government program (Technology Upgradation Funds Scheme (TUFS)) influenced the global competitive advantage of the Indian textile firms. Results from a panel of firms during the 1989-2010 period show that while accessing the resources provided by the government program enhanced global market share, this accrued at the cost of lower profitability. Furthermore, we find that the relationships between the institutional stimulus and global market share and profitability are moderated by quasi-institutions within which individual firms are embedded, namely business groups.

Title: Leveraging City-Level Legacies across Time-Space


  • Li Dai, Western University
  • Peter Ring, Loyola Marymount University

Abstract: This paper explores the mechanisms by which interpersonal ties spanning international bridging institutions generate network value for firms going abroad. Defined as the aligned intentions and legacies of people embedded in historically-formed city dyads across national boundaries, international bridging institutions have the potential to provide explanatory power beyond existing conceptions of home-host country differences. Drawing on insights from the rich literatures on networks and institutions, we look at the implications for firm internationalization of long-standing person-to-person relationships fostered through sister city ties. We develop propositions concerning the entry timing and mode of firms and their performance in a previously unstudied context, and offer preliminary thoughts on our empirical approach. Our work represents an effort to incorporate individual and city level constructs into research on international strategy.

Title: Talk Softly and Carry a Big Stick: Inter-State Diplomatic Networks and MNE Disclosure Strategy


  • Anthony Cannizzaro, The Catholic University of America
  • Robert Weiner, George Washington University

Abstract: In this paper, we investigate how multinational enterprises (MNEs) can use transparency as a non-market strategy to manage political hazards abroad. We propose the degree to which MNEs sacrifice transparency for security depends upon the ability to leverage a non-market resource unexplored in the strategy literature: diplomatic capital. We employ network theory to examine the global web of relationships in which firms and states are embedded, for as a network resource, diplomatic capital exists within relationships, not in firms or states themselves. We argue a country’s ability to defend a constituent MNE depends upon the strength of home-host diplomatic ties and international affinity. Further, we propose state-owned enterprises have an advantage in leveraging these resources by virtue of their intrinsic ties to the state.

Title: The Effects of legitimating Process on the Cross-Border Acquisition Performance of Transitional Economy Firms


  • Yinuo Tang, University of Hong Kong

Abstract: This study proposes that the evolution of institutional reforms and the resulting competing institutional logics influences the mechanisms through which the Transitional Economy Firms (TEFs) establish legitimacy and overcome financial constraints in cross-border acquisitions. Specifically, we suggest that TEFs that use market-legitimacy processes, exemplified by cross-listing, to fill institutional voids perform better in cross-border acquisitions. In contrast, TEFs that use non market legitimacy processes, exemplified by political connections, perform less well. Studying how TEFs reconcile multiple competing institutional logics while they refine their scope and boundary through cross-border acquisitions, this research unpacks the legitimacy processes that TEFs engage in, and reveals their impact on firm performance in the global corporate control market.

Title: Understanding Corruption As a Nonmarket Strategy in a Cross-Border Context


  • Lili Yan, George Washington University
  • Robert Weiner, George Washington University

Abstract: This paper examines the relationship between corruption and nonmarket strategy in a cross-border context, using a unique dataset with accurate, firm-specific measures of corruption. We first examine the effects of home country corruption norms on firms’ strategy to corrupt abroad. We then move beyond the institutional context to explore the rationale behind the heterogeneity among firms from the same corrupt country in different compliance with host governments’ bribery request. We find that firms from corrupt countries are more likely to pay bribes abroad, and propose that firms’ past exposure to corruption develops their capacity to use bribery to do business abroad. It contributes to the strategy literature by connecting corruption to firms’ nonmarket capability developed through their previous experience in dealing with their home governments.

All Sessions in Track G...

Sun: 08:00 – 09:15
Session 389: Managing the Multinational Organization in an Increasingly Complex World
Sun: 09:30 – 10:45
Session 221: Global Stakeholder Networks
Session 390: Local Determinants of Competitive Advantage and Disadvantage
Sun: 11:15 – 12:30
Session 2: Offshore Outsourcing, Dynamic Capabilities, and the Changing Nature of Firm Boundaries
Sun: 15:45 – 17:00
Session 270: Innovation in MNCs and Global Networks
Session 371: Inter and Intra Organizational Learning Across Borders: A Knowledge Management Perspective
Session 380: Small, Young and Entrepreneurial Firms: A Unique Perspective in Globalization
Sun: 17:15 – 18:30
Session 603: Global Strategy IG Business Meeting
Mon: 08:00 – 09:15
Session 335: Internationalization and Strategic Decisions
Session 379: Emerging Markets: Understanding the Importance of Context
Mon: 11:00 – 12:15
Session 372: The Challenges of Global Operations: Managing R&D and Complexity
Session 373: Global Diversification: Governance and Performance Implications
Mon: 14:45 – 16:00
Session 375: Changing External Environments: How do Multinationals Respond?
Session 381: Firm boundaries in Multinational Organizations: Antecedents and Consequences
Session 414: Global Networks and Business Groups
Mon: 16:30 – 17:45
Session 226: Culture, Norms and Institutions: The contextual influences on Entrepreneurship
Session 374: Antecedents and Consequences of Multinational Location Decisions
Session 382: Drivers of Multinational Performance:What, Where and When?
Tue: 08:00 – 09:15
Session 383: Globalization of R&D: Implications for Learning and Innovation
Tue: 11:00 – 12:15
Session 376: Headquarters Subsidiary Relationship: New Approaches to an Old Question
Session 384: Multinational Location Decisions: New Approaches Across Different Perspective
Tue: 15:30 – 16:45
Session 263: Innovation Models in Emerging Economies
Session 377: Organizing Assets Across Borders: Drivers and Consequences
Session 385: Multinational firms and the External Environment: The Role of Institutions
Tue: 17:15 – 18:30
Session 378: Global Outsourcing & Offshoring: Implications for Multinational Decisions

Strategic Management Society