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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.

The recent privatization of state‐owned enterprises in the Czech Republic forms a natural experiment to test and compare the predictive ability of the resource‐based view (RBV) against the market‐based view (MBV) under conditions of great change. It has been recognized in the literature that, under normal stable circumstances, a firm's internal resources and its external market power are fundamentally intertwined. Consequently, it is difficult to identify the relative roles of these two theories in explaining expected firm performance and firm value. However, when market conditions are in a state of flux, as in the case of the Czech Republic in 1992, we expect the firm's resources to be the primary determinants of firm value. In order to test this notion, an RBV model was developed, based on a set of firm features reflecting the rare and valuable ability to compete in the emerging capitalistic economy (as opposed to the currently prevailing bureaucratically planned economy). A contrasting MBV model was also developed, highlighting the role of market power in this regard. These models were assessed in a cross‐sectional sample of 988 Czech firms undergoing privatization. The empirical findings show that the RBV‐driven variables are remarkably better at explaining share values of Czech firms in the period of privatization than MBV‐driven variables. These results underscore the role of firm resources as a primary determinant of firm value in rapidly changing environments. Copyright © 2003 John Wiley & Sons, Ltd.

This study investigates the value of the strategic flexibility provided by firms' international investments during an economic crisis, defined here as an unanticipated significant downturn in the economy. To avoid below‐par performance, firms need to adapt quickly to this significant change in their environment, making real options very valuable to them. Although firms' international investments can potentially provide such flexibility, this issue has not been empirically examined in a context of such dramatic negative change. We consider two types of international investments by firms in this regard, foreign direct investments and export‐related international investments, developing two measures that directly assess the flexibility derived from each that are new to the literature. Based on these measures, we find evidence that both types of international investments provided valuable flexibility for Korean firms during the economic crisis conditions. This study contributes to the literature by showing that firms with real options investments in place have a greater ability to flexibly adapt their overall operations in line with unforeseen negative environmental change, in contrast to firms without such investments. Copyright © 2009 John Wiley & Sons, Ltd.

The model developed draws on resource-based, information-processing, and organizational learning theories to show how JV control processes affect the dynamics of interpartner learning. According to the model, firms forming learning-related JVs match with partners in line with their differences in capability and other requirements; the result is referred to as the asymmetry-need configuration. A satisfactory post-negotiation match implies a balance in perceived bargaining power, enabling both partners to institute controls appropriate for the specific types of learning undertaken. The model stresses that appropriate controls are essential for learning to take place, yet dissimilar learning needs or learning capabilities of the two partners may nonetheless result in unequal learning rates. Such unequal learning sets into motion a continual reconfiguration of the original relationship between the two partners, including modification of the initial asymmetry-need configuration and perception of bargaining power. The model emphasizes that JVs with learning objectives are inherently and inevitably dynamic because of these internal processes. However, control mechanisms themselves are an important means for diagnosing these processes and realigning the relationship. The formulation of such a process model helps to integrate many aspects of the JV relationship, including initial configuration, partner bargaining power, JV controls, and interpartner learning. In addition, the model captures the evolution of the partner relationship over the life of the JV. The focus on JV control processes in this research complements the insights gained from previous work that has looked at JV learning mainly in relation to the characteristics of the partners.

Understanding firms' behavior across countries -a key concern in the international business literature -requires the joint consideration of both institutional influences and firms' profit maximization goals. In the corporate social responsibility (CSR) area, however, researchers have utilized theories that take into account only one or the other -institutional theory, which explains CSR as legitimacyseeking activities in line with national-level institutions, or economic-based approaches that consider CSR effects only in terms of firm profitability. While an institutional argument implies convergence in CSR behavior among firms in similar institutional contexts, profit maximization logic treats CSR as a firm-specific behavior. We integrate these perspectives by demonstrating the moderating effects of firms' economic motivations for seeking legitimacy on the relationship between institutional environment and CSR responsiveness. We argue that variations in firms' economic visibility and economic vulnerability can bring about differences in their need for societal goodwill, and in turn, their legitimacy seeking. Findings on a database of apparel firms' employee-related CSR across 23 countries support this overall argument. The integration of such fundamentally different theoretical perspectives allows us to contribute new theoretical insights to international business on the influence of national institutions on firms' behavior.

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Scholars have noted that international investments have the potential to provide firms with real options value under uncertainty. To assess this issue, prior studies have tended to focus primarily on exchange rate volatility. Although multinational firms face other types of uncertainty as well, including those stemming from their domestic operating environment, the role of such uncertainty for firms' flexibility needs has not been previously considered. In this study we compare the influence of both domestic economic uncertainty and exchange rate uncertainty on the real option value of international investments of Korean firms over 16 years of varying uncertainty. We find evidence that an international investment network characterized by greater breadth and lower depth is associated with higher firm value under domestic economic uncertainty. Exchange rate uncertainty, however, was not found to play a role in firms' need for flexibility. The results suggest that firms are able to hedge exchange rate uncertainty by using mechanisms such as forward contracts or derivatives, thus potentially reducing the impact of this type of uncertainty on their operations. Journal of International Business Studies (2009) 40, 405–420. doi:10.1057/jibs.2008.79