Strategic Responses to Institutional Voids (Rationalization, Aggression, and Defensiveness): Institutional Complementarity and Why the Home Country Matters

Abstract

We seek to understand how the strategic responses of firms to institutional voids are affected by their home countries’ institutional contexts. It adopts an exploratory, multiple case studies approach examining the responses of advanced and emerging multinational enterprises, and local firms in two African countries which are characterized by such voids, namely the Democratic Republic of the Congo and Zimbabwe. Our research suggests that firms’ strategic responses to institutional voids in emerging or developing markets are affected by the home country’s institutional environment and firms’ experiences and advantages arising from that home context. Firms adopt strategic responses which reflect their respective advantages and this results in diverse approaches based on the interplay between capitalizing upon internal resources and institutional know-how. For some firms this may result in a defensive strategic response, whilst for others opportunistic and aggressive agility, or rationalization and reconciliation may manifest. We demonstrate differences between advanced and emerging multinational enterprises and domestic firms covering the spectrum between institutional outsiders and insiders. We emphasize the contextual nature of these strategic responses and argue that this requires integrating both a resource and institution-based analysis of firms’ underlying advantages and how they are able to leverage off these advantages in institutionally voided environments. Practical implications arise for doing business in emerging and developing markets.

Strategies for the declining printing industry: Diversification, consolidation, and internationalisation

“…This is particularly viable where international markets may be at different stages of such market disruption connected to innovation and change. The success of internationalisation may be affected by the initial motivation, the mode of entry and the ability of a firm to deploy its resources and capabilities effectively in distant locations and in different institutional environments, among other factors (Luiz et al, 2021). In the process of internationalisation, organisations acquire knowledge experientially, and innovation and learning may result.…”

Cross‐cultural implications of linguistic future time reference and institutional uncertainty on social entrepreneurship

“…Societies with uncertain institutional environments tend to be poorer and more unequal (Deaton, 2013; Milanovic, 2019; Rubin, 2008), more likely to violate human rights (Kizilkaya, 2021; Welzel, 2013), and more likely to experience profound sustainability issues (Lisciandra & Migliardo, 2017; Wang, Cardon, Liu, & Madni, 2020). At the firm level, an uncertain environment is costly and unpredictable, which makes it more difficult for companies to plan, manage transaction costs, and implement strategies (Luiz, Magada, & Mukumbuzi, 2021).…”

Gestão Municipal de Resíduos Domiciliares: um estudo sob a ótica do vazio institucional ## Municipal Management of Domiciliary Waste: a study under the optics of institutional void

“…A gestão municipal de resíduos sólidos se torna um desafio quando se observa a presença do vazio institucional (VI), que caracteriza países de economias emergentes, como o Brasil. O VI representa um ambiente turbulento, custoso e imprevisível que dificulta estratégias de longo prazo e o próprio planejamento e retorno de investimentos em negócios (Luiz et al, 2021).…”

“…O VI interfere nas questões institucionais, que envolvem a articulação entre a legislação e sua aplicação, em que a instabilidade política, volatilidade econômica e turbulência macroeconômica dificultam o planejamento de longo prazo e sua execução. O VI é característica marcante de países de economias emergentes como o Brasil e retrata a desarticulação e desalinhamento entre aspectos regulatórios, políticos e gerenciais, que dificultam a implementação de planos estratégicos nas organizações (Luiz et al, 2021). O VI representa as condições que dificultam a interação entre agentes e atores de uma região, que resultam em custos elevados para obtenção de recursos materiais, capital, (Khanna & Palepu, 1997, 2000, 2010, inclusive na falta de articulação entre municípios da região em análise para sanar o problema da gestão dos RSU.…”

“…A análise de conteúdo permitiu que os dados documentais fossem comparados com as informações coletadas nas 17 entrevistas realizadas. Pode-se constatar a partir deste estudo a existência de um Vazio Institucional (Khanna & Palepu, 1997;Luiz et al 2021), devido à falta de regularidade quanto às iniciativas de coleta seletiva, existência de catadores regularizados, realização de compostagem e participação não efetiva na atuação de consórcio intermunicipal.…”