Institutional origins of WOFS formal contracting: A judicial arbitrariness perspective

George O. White, Thomas Hemphill, Thomas Weber and Kaveh Moghaddam

International Business Review, 2018, vol. 27, issue 3, 654-668

Abstract: In drawing from neo-institutional theory and the institution-based view, this study provides new insights concerning how home and host country norms influence wholly owned foreign subsidiary (WOFS) formal contract utilization. Our analysis of 171 WOFSs operating in the Philippines suggests that parent home country uncertainty avoidance, as an institutionalized organizational practice, is positively related to WOFS utilization of formal contracts in governing interorganizational relationships. Our results also reveal that managerial perceptions of local judicial arbitrariness directly influence formal contract utilization, and moderate the positive relationship between parent home country uncertainty avoidance and WOFS formal contract utilization. Furthermore, when compared to managerial perceptions of national judicial arbitrariness, perceived local judicial arbitrariness will exhibit a stronger negative direct and indirect influence on WOFS formal contract utilization. Implications and future research directions are discussed.

Keywords: Judicial arbitrariness; Rule of law; Uncertainty avoidance; Formal contracting; Interorganizational relationships; Institution-based view; Neo-institutional theory; Emerging markets (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0969593117308569
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:iburev:v:27:y:2018:i:3:p:654-668

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/journaldescription.cws_home/133/bibliographic
http://www.elsevier. ... me/133/bibliographic

DOI: 10.1016/j.ibusrev.2017.11.002

Access Statistics for this article

International Business Review is currently edited by P. Ghauri

More articles in International Business Review from Elsevier
Bibliographic data for series maintained by Catherine Liu ().