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Institutional exceptions on global projects: a process model

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Abstract

This inductive study offers an examination of 23 cases in which informants from firms engaged in large-scale global projects reported unforeseen costs after failing to comprehend cognitive-cultural, normative, and/or regulative institutions in an unfamiliar host societal context. The study builds on the conceptual framework of institutional theory. The findings, which include propositions and a generic narrative model, contribute to theoretical knowledge of how institutional exceptions arise, how they are resolved, and how they typically involve three general phases: ignorance, sensemaking, and response. The findings also articulate the kinds of institutional transaction costs that an entrant incurs in each of the three phases, and the conditions that lead to the growth of these costs.

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  1. Excerpt from e-mail to informants: “I would like to publish a story from our interview in a scientific publication. It is important to verify two criteria: (1) that all factual details are accurately represented; and (2) that the content is appropriately disguised to ensure confidentiality of the parties involved. Please read the story and let me know if it meets these criteria. If it needs modification, please suggest appropriate changes.”

  2. This exception, we think, based on discussions with non-Navy managers who had Spain country-experience, stemmed from the fact that the US and Spanish AEC industries are organized differently. In Spain, contractors do not have in-house designers, architects or engineers to prepare shop drawings. Instead, this expertise resides in engineering and design firms. In the US, contractors typically have design expertise in-house. Thus the Spanish firm seemed to be confused by the Navy's demand that they do shop drawings. But the Navy, exhibiting closed-minded tendencies, could not pinpoint the root cause of this exception, even after a full year's delay.

  3. One prior study to operationalize the concept of open-mindedness did so with two items: “It concerns me that I might have biases of which I'm not aware”; and “It's important to me to understand what other people think about things” (Facione, Sánchez, Facione, & Gainen, 1995). Future researchers might operationalize this variable by counting the number of questions asked by the entrant of the host, or the proportion of time spent by the entrant listening vs talking to the host during meetings and discussions; likewise, laboratory researchers might build on methods used to assess emotional intelligence.

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Acknowledgements

Thanks to our scholarly friends at the Collaboratory for Research on Global Projects, Stephen Barley, Tamaki Horii, Raymond Levitt, Doug McAdam, Ashwin Mahalingam, Douglass North, Richard Burt and John E. Taylor; colleagues at Stanford University, Masahiko Aoki, Tsedal Beyene, Chris Bingham, Kathleen Eisenhardt, Avner Greif, and Pamela Hinds; scholars at the Ronald Coase Institute workshop on institutional analysis, Lee Benham, Alexandra Benham, John Nye, and Alberto Simpser; and this journal's three anonymous reviewers and Departmental Editor Witold Henisz for excellent comments and guidance. Financial support for this research was provided, in part, by the National Science Foundation under Grant No. IIS 9907403. Any opinions, findings, and conclusions or recommendations expressed in this material are those of the author(s) and do not necessarily reflect the views of the National Science Foundation.

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    Ryan J Orr & W Richard Scott

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Correspondence to Ryan J Orr.

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Accepted by Anand Swaminathan, Special Issue Editor and Witold Henisz, Special Issue Editor and Departmental Editor, 4 September 2007. This paper has been with the authors for two revisions.

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Orr, R., Scott, W. Institutional exceptions on global projects: a process model. J Int Bus Stud 39, 562–588 (2008). https://doi.org/10.1057/palgrave.jibs.8400370

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