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Adjusting to and learning from institutional diversity: Toward a capability-building perspective

Abstract

This paper identifies two main dimensions – institutional diversity and dynamism – in the research stream that has substantively engaged with the important contribution of Jackson and Deeg (J Int Bus Stud 39(4):540–561, 2008). Taking into account their core criticism that institutional analysis in international business research is often de-contextualized, and building on these two dimensions, we present two possible paths for institutional analysis that are sensitive to context. The first is a methodological shift towards configurational analyses, and specifically the analysis of counterfactual scenarios that could reveal new information about decision alternatives. The second is a shift away from a focus on costs, and towards the possibility of MNEs building capabilities in an exploratory manner when confronted with institutional diversity. Both approaches build on an understanding of MNEs as strategic actors that co-evolve with their environments.

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ACKNOWLEDGEMENTS

We are grateful to Editor-in-Chief Alain Verbeke and two anonymous reviewers for their insightful feedback during the review process. The research is supported in part by the Research Grants Council of Hong Kong (HKUST#16501814 and #16505817). This commentary benefited greatly from joint work on dynamic capabilities with Jialin Du and Jingtao Yi.

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Correspondence to Sarianna M. Lundan.

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Accepted by Alain Verbeke, Editor-in-Chief, 1 October 2018. This article was single-blind reviewed.

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Lundan, S.M., Li, J. Adjusting to and learning from institutional diversity: Toward a capability-building perspective. J Int Bus Stud 50, 36–47 (2019). https://doi.org/10.1057/s41267-018-0198-9

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Keywords

  • institutional theory
  • institutional diversity
  • institutional change
  • dynamic capabilities
  • qualitative comparative analysis
  • decade award