The Impact of Institutions on Collaborative Innovations and the Role of Equity‐Based Entry Modes

Abstract

This paper examines the impact of institutional variables on multinational enterprises’ choice between majority and minority acquisitions in their foreign affiliates and how this choice influences their propensity to collaborate with local firms. Using the institutional theory and the transaction costs theory, we develop a number of hypotheses. In particular, we suggest that majority acquisitions will be more likely than minority acquisitions and greenfields to enter collaborative R&D projects in countries that belong to the Civil Law/Eastern European legal tradition, or countries where the protection of minority shareholders is poor. These hypotheses are tested using an unbalanced panel of subsidiaries controlled by British multinationals, located in 39 countries. The results confirm our theoretical predictions.

Do Firms Earn Rents from the Intangible Assets of Their Owners? Institution‐Based Insights from the Energy Sector

“…This choice is also consistent with prior research on institutional quality (Chan, Isobe and Makino, 2008; Kafouros and Aliyev, 2016b; Sena et al. , 2022). It is frequently used in this literature because it defines the concept with direct reference to minimizing transaction costs: ‘Effective institutions raise the benefits of cooperative solutions or the costs of defection, to use game theoretic terms.…”

“…We focus on the new institutional economics strand of institutional theory (Aguilera and Grøgaard, 2019) because its transactioncost-based rationale is consistent with the costminimization and profit-maximization assumptions in the RBV (Peteraf, 1993). This choice is also consistent with prior research on institutional quality (Chan, Isobe and Makino, 2008;Kafouros and Aliyev, 2016b;Sena et al, 2022). It is frequently used in this literature because it defines the concept with direct reference to minimizing transaction costs: 'Effective institutions raise the benefits of cooperative solutions or the costs of defection, to use game theoretic terms.…”

“…However, although the above logic suggests that multiple ownership of OIAs adds to the VRIN characteristics, the provision of OIAs also brings an additional transactional relationship -that between the (multiple) owners. Therefore, the multiple ownership advantage of the OIAs will be subject to institutional quality (Sena et al, 2022;Yiu, Wan and Xu, 2019;Young et al, 2008). Specifically, we expect that the multiplicity-of-ownership advantages of OIAs will be greater in institutionally stronger contexts than in lower quality institutional environments.…”

“…Therefore, the multiple ownership advantage of the OIAs will be subject to institutional quality (Sena et al. , 2022; Yiu, Wan and Xu, 2019; Young et al. , 2008).…”

Stratified View of Institutional Fit

“…The vast majority of studies have focused on how institutional pressures lead to institutional fit (Dubey et al, 2017(Dubey et al, , 2019Huo et al, 2013), the or-ganizational response to these pressures (Beynon et al, 2020;Chaudhry and Rubery, 2019;Gaganis et al, 2021;Sena et al, 2021;Villadsen, 2013;Wilson and McKiernan, 2011), the relationship between institutional fit and legitimacy (Liedong, Rajwani and Mellahi, 2017) and the relationship between institutional fit and performance (Dubey, Gunasekaran and Ali, 2015;Peretz and Morley, 2021;Volberda et al, 2012). In this regard, it is deemed good for organizations to conform to institutional norms (Heugens and Lander, 2009) to obtain legitimacy (i.e.…”