Institutions and competition: does internationalisation provide advantages for the family firms in a transition economy?

Abstract

PurposeKosovo has experienced a radical shift from a centrally planned economy to a market economy and built institutions from scratch. During the institutional building process, due to inconsistencies in institutional reforms, firms faced several challenges in competing in the domestic market and engaging in exporting activities. The purpose of the study is threefold. First, to examine how institutional settings influence family firms’ success; second, how and which types of strategic behaviours family firms pursue in response to institutional deficiencies and third, whether and how internationalisation helps the firms overcome the difficulties resulting from deficiencies of the institutions.Design/methodology/approachThis study employs a qualitative document analysis technique using secondary and primary data to examine the impact of institutional settings on firm internationalisation and related firm reactions.FindingsFindings suggest that fiscal policy, weak protection of property rights and contractual enforcement negatively influenced family firms because of unfair competition, unpredictable business environment and additional costs due to deficient institutions. The authors found that internationalisation provided benefits for the firms in handling the problems posed by the institutions. The firms focused on three main strategies to respond to weak institutions: improving product quality, diversifying and differentiating products and setting competitive prices.Originality/valueThis study contributes to the literature and explains how and which economic institutions influence firm internationalisation and how engagement in international business activities provides an advantage in responding to deficient institutions in the home country.

Institutional and individual determinants of entrepreneurial intentions: evidence from developing and transition economies

“…Regarding entrepreneurship, institutional environments in developing economies (e.g., Turkey) are considered more favorable institutional contexts (Guerrero et al 2021 ) compared to those in transition economies (e.g., Kosovo). Countries characterized by the latter are represented by a low-income institutional context unfavorable to entrepreneurship, derived from the uncertainty of policies and other institutional settings (Kryeziu and Coşkun 2018 ; Coşkun et al 2022 ; Kryeziu et al 2022 ; Patel and Wolfe 2022 ). On the other hand, the developing and transition economies–the context of this study–are characterized by uncertainties present in a weak institutional environment.…”

A literature review on CEE firms’ internationalization: success measurement, achievement and outcomes

“…A large group of external factors is associated with local or foreign market and/or industry conditions (Cieślik and Kaciak, 2011; Cunningham et al , 2012). Regarding local conditions, authors have found that smallness of the home market can push firms abroad (Coşkun et al , 2022; Nowiński and Rialp, 2013). Moreover, decreased local demand (Durand and Lautier, 2013) or local consumers’ low interest for the firm’s products or services (Mihailova et al , 2020) can motivate them to seek for more promising foreign markets (Stoian et al , 2016).…”

“…From foreign market and/or industry conditions, studies have mentioned favourable economic policies like trade liberalization (Békés and Muraközy, 2012), financial incentives and a favourable investment climate (Gorynia et al , 2015). Foreign customers’ willingness to pay (Nowiński and Rialp, 2013) or buy more (Ciszewska-Mlinaric et al , 2016; Elo, 2016), and, thus, the potential to earn higher profits (Coşkun et al , 2022; Ďaďo et al , 2015; Fonfara et al , 2021; Vissak and Zhang, 2016) can also motivate firms to enter foreign markets. In addition, geographical proximity (Ciszewska-Mlinaric et al , 2016), availability of low-cost resources (Gorynia et al , 2015) and lack of language barriers (Panibratov and Latukha, 2014) can affect location choice.…”

“…From other outcomes , revenue growth (Éltető and Udvari, 2019; Panibratov et al , 2022; Srbinoski et al , 2022; Vaivode, 2018), reduced financial risk and higher survival due to earnings from multiple markets (Roolaht, 2017; Steinerowska-Streb et al , 2022; Vissak and Masso, 2020), increased financial stability (Coşkun et al , 2022), high profitability (Barłożewski and Trąpczyński, 2021a; Bulis et al , 2021; Çela et al , 2022; Ciszewska-Mlinarič et al , 2012; Kalotay and Sulstarova, 2010; Lukason and Vissak, 2016; Srbinoski et al , 2022) and constant profitability (growth) during several years were used to characterize successful internationalizers (Vissak, 2013; Vissak and Zhang, 2016). In addition, in some studies, employment growth (Srbinoski et al , 2022; Svetličič et al , 2007; Vissak and Masso, 2020), high productivity (Benkovskis et al , 2020; Brodzicki, 2017; Damijan et al , 2017; Jaklič et al , 2017), improved reputation (Ciszewska-Mlinarič et al , 2020), increased value added (Ciszewska-Mlinarič et al , 2012; Trapczynski, 2016b), gaining access to new technologies via successful investments (Götz and Jankowska, 2019) and increased innovativeness (Ermolaeva et al , 2018) and competitiveness (Trąpczyński et al , 2016) were mentioned.…”

Cognitive styles and dynamic managerial capabilities: implications for SMEs in a transition economy

“…The sample of this study consists of exporting Small and Medium Enterprises firms that operate in a transition economy, Kosovo. However, the number of firms engaged in exporting activities in the case of Kosovo is low (Kryeziu et al, 2022;Cos ¸kun et al, 2022). This is due to the structural reforms and the challenges that firms from Kosovo face (Kryeziu and Cos ¸kun, 2018) and factors at the firm level (Krasniqi and Mustafa, 2016).…”