<b>PERSPECTIVE</b>—Explaining Influence Rents: The Case for an Institutions-Based View of Strategy

Ahuja, Gautam; Yayavaram, Sai

doi:10.1287/orsc.1100.0623

Cited by 181 publications

(73 citation statements)

References 85 publications

(92 reference statements)

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“…Using our historical approach, this article inductively advances a theoretical framework that links these two streams of literature and provides a richer understanding of market imperfections by underscoring the interconnection between the two. Indeed, our framework shows that the two types of market imperfections could exist in an iatrogenic relationship in such a way that “an attempt to resolve one fundamental problem leads to a failure in another market‐ordering mechanism” (Ahuja & Yayavaram, , p. 1,638).…”

Section: Discussion Implications and Conclusion: Transitions Multimentioning

confidence: 99%

Better together: How multinationals come together with business groups in times of economic and political transitions

Bucheli

Salvaj

Kim

2018

Global Strategy Journal

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Research Summary: This article studies two interrelated questions. First, why did business groups in emerging markets thrive and prevail after pro‐market reforms were implemented in their countries? And, second, what type of adaptation strategies can multinational corporations develop in order to be competitive in economies dominated by business groups? By conducting an archive‐based historical network analysis of business groups in Chile during periods of major economic and political transitions, we maintain that business groups were created in periods of protectionism as a way to navigate economies with strong state participation or inefficient markets. In this process, these groups endogenously created an economy with market imperfections resulting from the dominance of these business groups. This means that the transition toward more open markets did not necessarily create more competitive environments and that elites in emerging economies were unwilling to abandon the advantages of having links between their businesses. Multinationals entering this economy adapted by becoming business groups themselves and creating links with other business groups. In sum, strategies devised as means to reduce market imperfections created new imperfections that incentivized the business groups to retain their structure and forced multinationals to become business groups. Managerial Summary: Large diversified conglomerates known as business groups dominate the markets of emerging economies. These groups have survived important changes taking place in their own countries, including the abandonment of an import substitution industrialization model for an open market one or changes from military regimes to democratic ones. This article explores two aspects related to these transitions most emerging economies have gone through. First, why did some business groups survive despite the fact that many of them were created and grew during protectionist times? And, second, what strategies have multinational corporations developed when operating in economies dominated by those powerful business groups? We show, first, that some business groups survived the transition by rearranging the type of links they had with each other, and, second, that multinationals competing in economies dominated by those business groups opted for becoming business groups themselves.

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Section: Discussion Implications and Conclusion: Transitions Multimentioning

confidence: 99%

Better together: How multinationals come together with business groups in times of economic and political transitions

Bucheli

Salvaj

Kim

2018

Global Strategy Journal

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“…The possibility that an externality may be naturally bounded-that is, excludable outside of a specific subset of actors-is important because it creates the potential for private ordering (Ahuja & Yayavaram, 2011;Baron, 2001;Williamson, 1996). Being part of a bounded community will lower the incentive to free-ride, while raising the incentives to monitor each other (Hansmann, 1996), and making free-riding more readily observable (Ostrom, 1990).…”

Section: Bounded Externalities and Self-governing Collectivesmentioning

confidence: 99%

Private action in public interest: The comparative governance of social issues

Luo

Kaul

2018

Strategic Management Journal

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Research Summary We develop a theoretical framework to define the comparatively efficient organizational form for dealing with a social issue, based on the market frictions associated with it. Specifically, we argue that for‐profits have an advantage in undertaking innovation and coordinating production economies, nonprofits in playing a fiduciary role given ex post information asymmetry, self‐governing collectives in dealing with bounded externalities through private ordering, and state bureaucracies in governing general externalities. We build on these arguments to develop a mapping between combinations of these market frictions and the comparatively efficient arrangements to govern them, including a variety of hybrid arrangements such as private‐public partnerships, social enterprises, corporate social responsibility, and so on. Our framework thus contributes to research in strategy, organizations, and public policy. Managerial Summary What is the best way to deal with a social problem? While some believe such problems are best left to the state, others argue that business should take the lead in solving them, or favor nonprofit solutions. In this article, we move beyond such one‐size‐fits‐all approaches, highlighting the different strengths of different organizational forms. We argue that for‐profits' strong incentives make them more innovative; nonprofits are more trustworthy in representing the best interests of others; collectives enable actors to self‐organize around a common interest; and the state is best for issues that impact the entire population. We thus develop a mapping between the nature of the social problem and the organizational form—or combination of organizational forms—that may deal with it most efficiently.

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“…The inefficiency of state governance is said to provide undue market advantages for firms with substantial political resources, as the possibility of regulatory capture facilitates the uneven implementation of public policy (Ahuja & Yayavaram, 2011;Khanna & Palepu, 1997). In inefficiently governed countries, firms with substantial political resources can obtain preferential security for their individual property and contract rights, allowing them to prosper to the detriment of other firms (Dieleman & Sachs, 2008;Hellman, Jones, & Kaufmann, 2003).…”

Section: Government Efficiency and Firm-level Characteristicsmentioning

confidence: 99%

Government efficiency and international technology adoption: The spread of electronic ticketing among airlines

Galang

2012

J Int Bus Stud

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Extending research on the institution-based view of international business strategy, this paper posits that the international adoption of technology among firms is distinct from its intra-national counterpart because this process is influenced by the efficiency of the government institutions where each firm is located. Low government efficiency delays investment in unknown technologies by increasing contracting hazards, environmental uncertainty and the difficulty of allocating potential returns; thus requiring greater experience on the part of firms when undertaking investment decisions. Furthermore, government inefficiency accentuates the relative significance of firm-specific drivers of technology adoption, but reverses the positive effect of industry competition in promoting technology adoption. I empirically investigate this phenomenon through hazard models analyzing the factors that affect the timing of the adoption of electronic ticketing by close to 180 airlines operating in 110 different countries. The results imply that government inefficiency in certain countries not only leads to slower technology penetration rates compared with their counterparts, but also exacerbates the technology gaps within countries by providing unwarranted advantages to firms that are already well entrenched.

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PERSPECTIVE—Explaining Influence Rents: The Case for an Institutions-Based View of Strategy

Cited by 181 publications

References 85 publications

Better together: How multinationals come together with business groups in times of economic and political transitions

Better together: How multinationals come together with business groups in times of economic and political transitions

Private action in public interest: The comparative governance of social issues

Government efficiency and international technology adoption: The spread of electronic ticketing among airlines

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