How does corruption distance affect MNCs' entry ownership strategies and entry performance? A combined lens of transaction cost economics and institutional theory

<p>Purpose — Government determines the rules of the game that influence the strategies and actions of a firm. Government corruption increases the transaction costs and generates institutional pressures for MNCs. Corrupt countries are often economically attractive emerging markets, which are strategically important for foreign entrants. However, little research has been carried out as to discussing the role of market entry strategies in MNCs entering corrupt host markets. In this thesis, we focus on how firms strategically respond to corrupt environments, as well as how they succeed in the corrupt foreign markets. Theory/Framework — We first scrutinized two fundamental theoretical underpinnings that are pertinent to this research, namely, transaction cost economics (TCE) and the institutional view. Specifically, not only does corruption pervasiveness affect MNCs’ entry decisions, corruption arbitrariness and institutional forces also has important implications. Through a TCE lens, we decomposed the “arbitrary corruption” and focus on country-level arbitrariness, i.e., a “lack of political constraint” and “political instability” in a host country. From an institutional view, we analysed the influence of both external and internal institutional forces, that is, the legitimacy pressure from a host government, as well as the internal pressure driven by the ethical identity of a parent firm (based on the organizational identity theory) in the context of corruption. Drawing on the blended perspectives, we filled in the research gaps by constructing a conceptual model that connects corruption distance with entry ownership strategies, and the subsequent entry performance. Methodology — We manually extracted data regarding foreign market entry behaviours of US listed MNCs from periodical databases using the Event History Analysis (EHA). We ran empirical analysis to demonstrate how corruption and related factors affect MNCs’ entry strategies, and how these strategies produce different entry performance. By using logistic models, the first study examined the impact of corruption distance on MNCs’ strategic ownership choices between joint ventures (JVs) and wholly owned subsidiaries (WOSs), and how corruption arbitrariness and institutional forces respectively moderate the corruption-strategy relationship. The second study employed Heckman two-stage models to examine how corruption distance, selected moderators and entry strategy fit enhance entry performance. Key findings — Empirical findings in Study 1 suggest that as corruption distance increases, MNCs are more likely to choose the JV mode. They tend to choose strategic alliances when entering a host country with fewer political constraints. The results also indicate that both “lack of political constraint” and “political instability” negatively moderate the positive relationship between corruption distance and MNCs’ strategic preference for a JV entry. From an institutional view, the findings indicate that regulatory pressure driven by political intervention, as well as internal constraints in the form of corporate identity, affect firms’ entry decisions. As corruption distance becomes greater, international firms with less salient ethical identities show a greater inclination for local adaptation, whereas their ethically conscious counterparts show little conformity in their strategic response to host-country corruption. Study 2 advances the understanding of how corruption distance and entry strategies affect a foreign subsidiary’s entry performance and answers the subsequent “so-what” question. Employing an EHA-based measure of entry performance, we have found that 1) As corruption distance increases, foreign subunits are less likely to be successful. 2) In relation to the WOS entry, local partnership overcomes competitive disadvantages induced by corruption distance and generates more successful host-market entries. 3) As opposed to wholly controlled investment, local partnering would be more successful where a host country is more politically unconstrained. 4) We confirmed a positive effect of corporate ethical identity on entry success. Contributions/Originalities — Both studies contribute to the marketing strategy research in international markets by linking government corruption and relevant factors with firm strategy and firm performance through dual lenses from TCEs and the institutional theory. The research does not only have theoretical value in demonstrating the implications of corruption distance, but also sheds light on strategic decisions and foreign entry outcomes for international practitioners entering host countries under various transactional costs and institutional conditions.</p>

How does corruption distance affect MNCs' entry ownership strategies and entry performance? A combined lens of transaction cost economics and institutional theory

<p>Purpose — Government determines the rules of the game that influence the strategies and actions of a firm. Government corruption increases the transaction costs and generates institutional pressures for MNCs. Corrupt countries are often economically attractive emerging markets, which are strategically important for foreign entrants. However, little research has been carried out as to discussing the role of market entry strategies in MNCs entering corrupt host markets. In this thesis, we focus on how firms strategically respond to corrupt environments, as well as how they succeed in the corrupt foreign markets. Theory/Framework — We first scrutinized two fundamental theoretical underpinnings that are pertinent to this research, namely, transaction cost economics (TCE) and the institutional view. Specifically, not only does corruption pervasiveness affect MNCs’ entry decisions, corruption arbitrariness and institutional forces also has important implications. Through a TCE lens, we decomposed the “arbitrary corruption” and focus on country-level arbitrariness, i.e., a “lack of political constraint” and “political instability” in a host country. From an institutional view, we analysed the influence of both external and internal institutional forces, that is, the legitimacy pressure from a host government, as well as the internal pressure driven by the ethical identity of a parent firm (based on the organizational identity theory) in the context of corruption. Drawing on the blended perspectives, we filled in the research gaps by constructing a conceptual model that connects corruption distance with entry ownership strategies, and the subsequent entry performance. Methodology — We manually extracted data regarding foreign market entry behaviours of US listed MNCs from periodical databases using the Event History Analysis (EHA). We ran empirical analysis to demonstrate how corruption and related factors affect MNCs’ entry strategies, and how these strategies produce different entry performance. By using logistic models, the first study examined the impact of corruption distance on MNCs’ strategic ownership choices between joint ventures (JVs) and wholly owned subsidiaries (WOSs), and how corruption arbitrariness and institutional forces respectively moderate the corruption-strategy relationship. The second study employed Heckman two-stage models to examine how corruption distance, selected moderators and entry strategy fit enhance entry performance. Key findings — Empirical findings in Study 1 suggest that as corruption distance increases, MNCs are more likely to choose the JV mode. They tend to choose strategic alliances when entering a host country with fewer political constraints. The results also indicate that both “lack of political constraint” and “political instability” negatively moderate the positive relationship between corruption distance and MNCs’ strategic preference for a JV entry. From an institutional view, the findings indicate that regulatory pressure driven by political intervention, as well as internal constraints in the form of corporate identity, affect firms’ entry decisions. As corruption distance becomes greater, international firms with less salient ethical identities show a greater inclination for local adaptation, whereas their ethically conscious counterparts show little conformity in their strategic response to host-country corruption. Study 2 advances the understanding of how corruption distance and entry strategies affect a foreign subsidiary’s entry performance and answers the subsequent “so-what” question. Employing an EHA-based measure of entry performance, we have found that 1) As corruption distance increases, foreign subunits are less likely to be successful. 2) In relation to the WOS entry, local partnership overcomes competitive disadvantages induced by corruption distance and generates more successful host-market entries. 3) As opposed to wholly controlled investment, local partnering would be more successful where a host country is more politically unconstrained. 4) We confirmed a positive effect of corporate ethical identity on entry success. Contributions/Originalities — Both studies contribute to the marketing strategy research in international markets by linking government corruption and relevant factors with firm strategy and firm performance through dual lenses from TCEs and the institutional theory. The research does not only have theoretical value in demonstrating the implications of corruption distance, but also sheds light on strategic decisions and foreign entry outcomes for international practitioners entering host countries under various transactional costs and institutional conditions.</p>

The Role Of Institutional Conditions In The Impact Of Economic Growth On Poverty

Purpose: According to the New Institutional View, the main reason for the great difference between countries in terms of growth, development and economic welfare is their institutional structures and foundations. Creating a stable structure in human relationships, institutions reduce insecurity, transaction costs and increase people's motivation. In this regard, the present study examined the role of institutional conditions in the impact of economic growth on poverty in middle and high per capita income countries from 2004 to 2017.

Classroom Discourse as Institutional Interaction: From the Perspective of Conversation Analysis

In this study, classroom discourse is chosen as the subject to be analysed in terms of the basic structures of conversation analysis (CA) which are turn-taking organisation, sequence organisation, repair and action formation, as developed principally by Harvey Sacks, Emanuel Schegloff and Gail Jefferson. As a form of educational talk, classroom interaction should be scrutinised not only in a conversational perspective, but also from an institutional view. Many controversies and debates regarding this particular discourse are present from the conversation analytic point of view, indicating that it is indeed an important subject that need extended studies on. This study analyses learner-learner interaction in task-oriented, learner-centred classrooms, instead of traditional classroom interaction, from the conversation analytic perspective. It helps expanding the research on this subject to a new focus, which is modern classroom interaction.

The emergence and adoption of digitalization in the logistics and supply chain industry: an institutional perspective

PurposeDespite increasing interest in digital services and products, the emergence of digitalization in the logistics and supply chain (L&SC) industry has received little attention, in particular from organizational theorists. In response, taking an institutionalist view, the authors argue that the emergence and adoption of digitalization is a socially constructed phenomenon.Design/methodology/approachThis paper shows how actor-level frameshifts contribute to an emergence of an overarching “digitalization logic” in the L&SC industry at the field level. Building on a longitudinal analysis of field actors' frames and logics, the authors track the development of digitalization over the last 60 years in the L&SC sector.FindingsThe authors classify specific time periods by key field-configuring events, describe the relevant frameshifts in each time period and present a process that explains how and why digitalization has emerged, been adopted and manifested itself in the L&SC industry.Originality/valueThe findings of the study provide insights about the evolution of a digitalization logic and thus advance the institutional view on digitalization in the L&SC industry.

A propositive contribution to the mitigation of the credit problem on Brazilian solidarity economy enterprises

The biggest impediment to the viability of Solidarity Economy Enterprises (SEE) is the credit issue, which due to lack of guarantees means that they cannot access credit through traditional banking channels and end up failing. In view of this unfavorable scenario, the objective of this work is to make a propositive contribution, evidencing elements that are useful to enterprises of solidarity economy in relation to obtaining credit. To do so, it relied on bibliographic research to link these factors, highlighting those that can be controlled by the SEE, as well as those external so that the credit assignment occurs, which resulted in the elaboration of a propositive instrument, with elements that facilitate the assignment of credits both in the user's view and in the institutional view. Its usefulness could be verified with a field research, conducted with 25 solidarity economy enterprises, which answered a questionnaire informing whether the existence of such an instrument would help in reducing the difficulties of obtaining credit, as well as being able to contribute with eventual adjustments.

Juridification as politics: An institutional view

In the existing literature on depoliticization, the increasing use of law as a medium to tackle social and political issues is deemed to be detrimental to the legitimacy of political processes. Against this view, I argue that this trend – which some scholars call ‘juridification’ – can be key to giving life to new forms of politics. First, I show why juridification is a political more than a legal process. Second, I illustrate recent critiques of the dangers inherent in the particular type of juridification that involves the growing use of rights. Third, while concurring with these critiques, I make the case that other facets of juridification are often underrated that can ignite a novel kind of politics. On this account, I go on by elaborating on the idea of self-organization of social groups vis-à-vis the state that is entailed in this notion of politics. Finally, I discuss the recognition of non-conventional family networks to exemplify how a politics of juridification could work. The conclusion is that, while juridification calls for a thorough revision of the tasks of politics, it does not thwart it. Rather, traditional representative politics could and should take stock of how it involves social actors in the creation of new bodies of regulation.

Toward an Integrated Policy Framework

Policymakers often face difficult tradeoffs in pursuing domestic and external stabilization objectives. The paper reflects staff’s work to advance the understanding of the policy options and tradeoffs available to policymakers in a systematic and analytical way. The paper recognizes that the optimal path of the IPF tools depends on structural characteristics and fiscal policies. The operational implications of IPF findings require careful consideration. Developing safeguards to minimize the risk of inappropriate use of IPF policies will be essential. Staff remains guided by the Fund’s Institutional View (IV) on the Liberalization and Management of Capital Flows.

The Origins of Trust Asymmetry in International Relationships: An Institutional View

Trust is key to relationship marketing. Although trust is bilateral, studies on the dispersion of trust among exchange parties remain limited, leaving the antecedents and outcomes of trust asymmetry largely underexplored. To fill the gaps, this study empirically examines the effects of different types of trust asymmetry on exchange performance and then investigates the institutional origins of trust asymmetry in international interfirm exchanges. Drawing on a survey of 134 international buyer–supplier relationships in China, the study finds that both calculative trust asymmetry and relational trust asymmetry have negative influences on exchange performance. The study also finds that formal institutional distance constrains calculative trust asymmetry and informal institutional distance increases relational trust asymmetry. Moreover, prior interactions and expectations of continuity significantly moderate the effects of formal and informal institutional distance. This study advances trust studies in cross-border settings.