Management researchers have traditionally emphasized two main factors in the defi nition of corporate strategies: internal capabilities and industry competition. However, in less stable, transition economies it is particularly the changing institutional environment that infl uences strategy defi nition and performance of multinational corporations (MNCs) as shown by numerous international business (IB) scholars. Yet, how institutions matter remains a largely unresolved question. This article examines how institutions have affected the value chain confi guration of Western pharmaceutical fi rms in China. Our research framework identifi es four major strategic shifts along the value chain of Western fi rms in the pharmaceutical industry: upgrading along the value chain, outsourcing to contract service providers,

Emerging markets and transition economies challenge established business theories. In this paper, we conceptualise a framework incorporating the institution-and resource-based view to analyse how institutions impact the operations of western companies in a transition economy context: foreign third party logistics service providers (3PLs) in Russia. Our case study's findings center on the question of how institutions affect foreign 3PLs' local operations in Russia along six resource and six institutional dimensions.

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