Practice Standardization in Cross-Border Activities of Multinational Corporations: A Resource Dependence Perspective

Abstract

This study examines the relationship between power dependence and practice standardization in the context of cross-border alliances. Existing studies have typically assumed that standardization or adaptation is a unilateral decision made by multinational corporations (MNCs) but ignored the influence of the relative power of multinational and local partners under conditions of government influence. Drawing on resource dependence theory (RDT), we argue that the power imbalance between multinational and local firms may shape the standardization of practices in their established alliances. The results, based on a sample of 243 Fortune 500 US companies, indicate that when the level of government influence is high, the positive effect of MNCs' resource importance on practice standardization diminishes and the negative effect of local firms' alternative resources becomes stronger. These findings suggest that RDT has important implications for understanding standardization versus adaptation in cross-border alliances.

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