International business responses to institutional voids

• Published in: Journal of international business studies Vol. 48; no. 3; pp. 293 - 307
• Main Authors: Doh, Jonathan, Rodrigues, Suzana, Saka-Helmhout, Ayse, Makhija, Mona
• Format: Journal Article
• Language: English
• Published: London Palgrave Macmillan UK 01.04.2017; Palgrave Macmillan
• Subjects: Business; Business and Management; Business Strategy/Leadership; Editorial; Internalization; International Business; Management; Multinational corporations; Organization; Strategic planning; Tracking; Transaction costs; transaction costs; market and nonmarket strategies; institutional voids; Multinational Corporations (MNCs) and Enterprises (MNEs); Institutions and International business
• ISSN: 0047-2506; 1478-6990
• DOI: 10.1057/s41267-017-0074-z

For nearly two decades, scholars in international business and management have explored the implications of institutional voids for firm strategy and structure. Although institutional voids offer both opportunities and challenges, they have largely been associated with firms’ efforts to avoid or mitigate institutional deficiencies and reduce the transaction costs associated with operating in settings subject to those institutional shortcomings. The goal of this special issue is to advance scholarship on this topic by (a) exploring institutional voids that are new to the literature, (b) providing a deeper assessment of the different ways in which firms respond to these voids, and (c) utilizing diverse disciplines and theoretical approaches to do so. In this introduction, we first review and synthesize extant research on institutional voids, tracking the evolution of institutional void scholarship since the inception of the concept (Khanna & Palepu, Journal of Economic Literature , 45(2):331–372, 1997 ) and providing our perspective on its contributions and limitations. We then summarize the contributions of the articles included in this special issue. In addition to identifying an array of institutional voids – economic and social – the articles highlight four different strategies for responding to them: internalization, substitution, borrowing and signaling. Drawing on these, we develop new insights on the implications of institutional voids for firm behavior. We conclude with suggestions for future research.