Abstract:This paper points out new directions for the deepening and broadening of the institution-based view, by drawing on three streams of research with which I have been involved recently: (1) outward foreign direct investment from emerging economies, (2) bankruptcy laws and entrepreneurship development, and (3) institution-based research focusing on Africa. Such deepening has been accomplished by enhancing our institutionbased understanding of foreign direct investment with a focus on emerging multinationals, while… Show more
“…Our study, therefore, contributes to strategic management in four major ways. First, by testing the dynamic multilevel view of institutions recently suggested as influencing firm performance, we empirically validate conceptual propositions of natural resource dynamics (Sachs, ) and institutional and resource dynamics (Lazzarini, ; Musachio, Lazzarini, & Aguilera, ; Peng, ). Zoogah et al (, p. 12) indicate that “the African context is a configuration or bundle of exogenous and endogenous stimuli that interactively Influences management of organizations.” Indeed, some scholars argue that the complexity and uncertainty of the African context leads to dynamics within and across national and firm levels (Chironga, Leke, Lund, & van Wamelen, ; Collier, ; Dia, ; Hyden, ; Mbaku, ).…”
Section: Introductionmentioning
confidence: 88%
“…Since the 1970s, institutional theory has become vibrant in sociology, accounting, economics, and political science and has transformed areas of management, particularly strategy, international business, and entrepreneurship (Peng, ; Peng et al, ; Scott, ; Tihanyi, Devinney, & Pedersen, ). As a result of the multidisciplinary foci, there are a number of definitions, perspectives, frameworks, terrains, and terminologies leading to some confusion (Peng et al, ).…”
Section: Theorymentioning
confidence: 99%
“…However, there are overlaps across the disciplines such that some combine both economic and sociological perspectives (Scott, ; also see Zoogah et al, , in the African context). In order to distinguish the institutional perspective in the management field, Peng draws on “the best available insights from the institutional literature, regardless of the disciplinary background” (Peng, , p. 276) “to differentiate from existing work in economics and sociology” to propose the institution‐based view that (Peng, , p. 75).…”
Section: Theorymentioning
confidence: 99%
“…It discusses the interactive processes by which institutions and resources influence organizational effectiveness. Organizations play a central role in economic development (Bloom, Genakos, Sadun, & van Reenen, ), and institutions often regulate their behaviors (Peng, ; Scott, ).…”
Research Summary
Does institutional endowment moderate the relationship between natural resource abundance and firm performance? Drawing from institution‐based theories (IBT), we examine the interactive effects of institutional endowment (as indicated by natural resource governance) on firm performance. We use 2013 data of 492 firms from 27 African countries and multilevel techniques to find significant interactions of institutional endowment. We discuss the theoretical and practical implications of these findings for management and organization scholarship.
Managerial Summary
The purpose of this study is to examine the extent to which firm performance differs across countries in Africa as a function of institutional factors given natural resource abundance. We find that firm sales are higher in countries with strong institutions, strong enabling environments, and strong safeguards and quality controls when natural resource abundance is high. When natural resource abundance is low, firm sales and net profits are higher in countries with strong reporting practices, and profit margins are higher in countries with strong safeguards and quality controls.
“…Our study, therefore, contributes to strategic management in four major ways. First, by testing the dynamic multilevel view of institutions recently suggested as influencing firm performance, we empirically validate conceptual propositions of natural resource dynamics (Sachs, ) and institutional and resource dynamics (Lazzarini, ; Musachio, Lazzarini, & Aguilera, ; Peng, ). Zoogah et al (, p. 12) indicate that “the African context is a configuration or bundle of exogenous and endogenous stimuli that interactively Influences management of organizations.” Indeed, some scholars argue that the complexity and uncertainty of the African context leads to dynamics within and across national and firm levels (Chironga, Leke, Lund, & van Wamelen, ; Collier, ; Dia, ; Hyden, ; Mbaku, ).…”
Section: Introductionmentioning
confidence: 88%
“…Since the 1970s, institutional theory has become vibrant in sociology, accounting, economics, and political science and has transformed areas of management, particularly strategy, international business, and entrepreneurship (Peng, ; Peng et al, ; Scott, ; Tihanyi, Devinney, & Pedersen, ). As a result of the multidisciplinary foci, there are a number of definitions, perspectives, frameworks, terrains, and terminologies leading to some confusion (Peng et al, ).…”
Section: Theorymentioning
confidence: 99%
“…However, there are overlaps across the disciplines such that some combine both economic and sociological perspectives (Scott, ; also see Zoogah et al, , in the African context). In order to distinguish the institutional perspective in the management field, Peng draws on “the best available insights from the institutional literature, regardless of the disciplinary background” (Peng, , p. 276) “to differentiate from existing work in economics and sociology” to propose the institution‐based view that (Peng, , p. 75).…”
Section: Theorymentioning
confidence: 99%
“…It discusses the interactive processes by which institutions and resources influence organizational effectiveness. Organizations play a central role in economic development (Bloom, Genakos, Sadun, & van Reenen, ), and institutions often regulate their behaviors (Peng, ; Scott, ).…”
Research Summary
Does institutional endowment moderate the relationship between natural resource abundance and firm performance? Drawing from institution‐based theories (IBT), we examine the interactive effects of institutional endowment (as indicated by natural resource governance) on firm performance. We use 2013 data of 492 firms from 27 African countries and multilevel techniques to find significant interactions of institutional endowment. We discuss the theoretical and practical implications of these findings for management and organization scholarship.
Managerial Summary
The purpose of this study is to examine the extent to which firm performance differs across countries in Africa as a function of institutional factors given natural resource abundance. We find that firm sales are higher in countries with strong institutions, strong enabling environments, and strong safeguards and quality controls when natural resource abundance is high. When natural resource abundance is low, firm sales and net profits are higher in countries with strong reporting practices, and profit margins are higher in countries with strong safeguards and quality controls.
“…As a result of globalization and the third industrial revolution (Ahlstrom, 2010), dynamic IT development and uptake in many industries, manufacturing and service IT firms have started to create more global footprints through cross-border M&As (Peng, 2015). This will help them to access increased market opportunities and advanced technologies outside of their home countries, which is important in resource acquisition and learning to build global competitiveness in the global market (Wang, Ahlstrom, Nair, & Hang, 2008;Yamakawa, Khavul, Peng, & Deeds, 2013).…”
Section: Literature Review and Hypothesesmentioning
Purpose
The purpose of this paper is to analyze how path dependence in the evolution of major theories of foreign direct investment (FDI) locked in a theoretical perspective of the multinational enterprise that focused on asset-exploitation. This perspective is challenged by recent contradicting observations of multinationals from China and other emerging economies. A decisive re-orientation of FDI theory is proposed as a way forward to resolve this tension.
Design/methodology/approach
Placing FDI theories into the context of FDI patterns prevailing at the time they were developed, Thomas Kuhn’s framework on the evolution of scientific knowledge is employed to track how the mainstream FDI theory emerged, went through a period of normal science and then approached a crisis of science in this field.
Findings
The evolution of FDI theory is strongly path-dependent, which made it difficult for theory to effectively incorporate new conceptual discoveries and empirical findings about the nature of FDI activity.
Originality/value
FDI theory would benefit from a full re-orientation to a demand-oriented perspective which places the pursuit of advantages, assets, resources, etc., at the core of the theory. Such a change is implicit in many recent theoretical advances and would assure theory is generalizable to all types of FDI.
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