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Understanding When MNCs can Overcome Institutional Distance: A Research Agenda

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Abstract

Classic research in international business has emphasized the constraining effects of host institutions on the behavior of foreign Multinational corporations (MNCs). Meanwhile, other research shows why this type of organization may be uniquely positioned to engage in behavior deviating from standard practice in a certain setting, and how it may do so over the course of engaging with host environments in order to overcome the distance between home and host country. We know significantly less about when particular context conditions actually translate into behavior involving MNCs overcoming institutional distance. Drawing on facets of the comparative capitalisms literature, this paper maps out how institutional distance involves four key dimensions: coordination, strength, thickness, and resources. The paper argues that the particular combination of these dimensions forming configurations of institutional distance will influence when MNCs are able to overcome distance, conceptualized as behaving in deviant ways. A research agenda is developed, paying special attention to how complex causal effects can be studied using qualitative comparative analysis and multiple case studies. More broadly, this paper refines and enriches our understanding of the context conditions that make deviant firm behavior possible.

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Notes

  1. Spreitzer and Sonenshein (2004) focus on positive deviance, i.e., behavior that deviates in honorable ways. In contrast, in this paper here I am concerned with deviant behavior in general, without a normative underpinning.

  2. Please note that this is not to be confused with the dominant approach in the IB literature of measuring the degree of distance dimensions (see Jackson and Deeg 2008). Rather, it helps determine set membership (see Ragin 1987), allowing for exploring configurations and complex effects as discussed in the CC literature.

  3. I would like to thank one of the anonymous reviewers for raising this point.

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Acknowledgements

I would like to thank Michael-Jörg Oesterle for his effective editorial guidance, and two anonymous MIR reviewers for their developmental and constructive reviews, which helped me to strengthen the paper. I am grateful to the German Research Foundation (DFG) for having funded two research projects (Grants GRK 1012 and FO 1024/1-1) related to this paper. Sjoerd Beugelsdijk, Tony Edwards, Anne-Wil Harzing, Gregory Jackson, Gerhard Schnyder, and Michael Witt provided comments on previous drafts. Finally, the paper has benefitted from the input I received from the audience at the 2015 Annual Meeting of the Academy of International Business.

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    Johann Fortwengel

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Fortwengel, J. Understanding When MNCs can Overcome Institutional Distance: A Research Agenda. Manag Int Rev 57, 793–814 (2017). https://doi.org/10.1007/s11575-017-0327-x

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