Institutions, resources and entry strategies in emerging economies

Klaus Meyer, Saul Estrin, Sumon Bhaumik and Mike W. Peng

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We investigate the impact of market-supporting institutions on business strategies by analyzing the entry strategies of foreign investors entering emerging economies. We apply and advance the institution-based view of strategy by integrating it with resource-based considerations. In particular, we show how resource-seeking strategies are pursued using different entry modes in different institutional contexts. Alternative modes of entry— greenfield, acquisition, and joint venture (JV)—allow firms to overcome different kinds of market inefficiencies related to both characteristics of the resources and to the institutional context. In a weaker institutional framework, JVs are used to access many resources, but in a stronger institutional framework, JVs become less important while acquisitions can play a more important role in accessing resources that are intangible and organizationally embedded. Combining survey and archival data from four emerging economies, India, Vietnam, South Africa, and Egypt, we provide empirical support for our hypotheses.

Keywords: institutional theory; emerging economies; strategic adaptation to context; modes of entry; acquisitions; joint ventures (search for similar items in EconPapers)
JEL-codes: L81 N0 (search for similar items in EconPapers)
Date: 2009-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (530)

Published in Strategic Management Journal, January, 2009, 30(1), pp. 61-80. ISSN: 0143-2095

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Journal Article: Institutions, resources, and entry strategies in emerging economies (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:4217

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