This article examines the institutional strategies of multinational enterprises (MNEs) operating in an emerging market, drawing attention to how longstanding foreign subsidiaries proactively negotiate their involvement with socio‐political actors. We build on institutional logics to explain how MNE subsidiaries develop sustained political, cultural, and cognitive embeddedness. Using an inductive, interpretive study of four century‐old Dutch MNE subsidiaries with a colonial legacy in Indonesia, we examine these three dimensions of the institutional environment, finding that local employees embedded in both the MNE and the host country sets of logics ‒ rather than expatriate managers ‒ most effectively facilitated sustained institutional embeddedness. Our findings also suggest that embedding practices in host institutional contexts and developing structures that align with host institutional expectations provided a platform for the unfolding of institutional strategies by local employees. However, MNE subsidiaries face contrasting logics between home and host country institutions, placing significant strains on MNEs’ ability to enact change.
Subsidiaries that were established in emerging markets many decades ago require different management practices than new market entrants and indigenous firms. The international business (IB) literature lacks both theories that predict the behaviors of mature subsidiaries in host countries as well as a solid empirical base to sufficiently comprehend this distinct category of firms. We explain the phenomenon, its distinct character, and underscore missed opportunities for research on mature subsidiaries in the IB field, with the ultimate goal of promoting research that can better advise managers of these multinational enterprises (MNEs).
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