Inter-Organizational Networks and Relationships as Informal Institutions: Business Groups in Emerging Economies.

Author(s)

Hyuk Kim ,

Download Full PDF Pages: 72-87 | Views: 338 | Downloads: 97 | DOI: 10.5281/zenodo.3466202

Volume 5 - November 2016 (11)

Abstract

This paper investigates the implications of inter-organizational networks and relationships (as informal institutions) for firms’ strategic choices and performance in emerging economies, testing two key propositions of the institution-based view of strategy proposed by institutional strategy literature. First, informal constraints will play a larger role in emerging economies, reducing uncertainty, providing guidance, and conferring legitimacy and rewards to managers and firms, where formal constraints are unclear or fail. Second, as formal market-supporting institutions are gradually implemented, a gradually reduced role of interpersonal relationships and more reliance on market-based capabilities will be observed. To test these two key propositions, business groups in multiple emerging economies are investigated, including China, Korea, Chile, India, Russia, Hungary, Poland, Czech Republic, and Indonesia. The investigation of business groups in multiple emerging economies confirms both key propositions. In essence, this paper tries to answer the question of ‘how institutions matter’, particularly in emerging economies. 

Keywords

inter-organizational networks and relationships; informal institutions; business groups; emerging economies; institution-based view of strategy

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