Journal of Innovation & Knowledge 1 (2 0 1 6) 117–124

Journal of Innovation
& Knowledge
www.elsevier.es/jik

Conceptual paper

Exploring the institutional perspective on

international business expansion: Towards a more
detailed conceptual framework

Richard Lynch, Zhongqi Jin ∗

Middlesex University Business School, UK

a r t i c l e i n f o a b s t r a c t

Article history: While the general principles of the Institutional Perspective have been widely accepted,
Received 5 January 2016 there has been only limited consideration to the present time of their in-depth application
Accepted 27 January 2016 to the strategies of individual firms engaged in international business. The paper argues
Available online 11 March 2016 that companies engaged in such activities will find that there is a significant gap in precisely
what aspects of the formal and informal institutional perspectives need to be identified and
Keywords: assessed for international expansion. The purpose of this paper is to develop a theoretical
International business paradigm that allows organizations not only to compare different countries with regard to
Institutional theory their potential for international business expansion from the perspective of Institutional
Country comparison Theory but also drawing on theories of International Business Strategy where relevant. The
theoretical framework assumes that such organizations are engaged in analyzing the insti-
tutional arrangements and resources of their home and possible host countries. The paper
then develops a conceptual framework that identifies five major components, namely peo-
ple, power, performance, pathways to international expansion, and productivity, the latter
being defined in terms of knowledge and innovation. It explores each of these areas in more
depth with the aim of adding a more detailed structure to elements of Institutional Theory
relevant to international business expansion.
© 2016 Journal of Innovation & Knowledge. Published by Elsevier España, S.L.U. This is an
open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/
by-nc-nd/4.0/).

Explorando el punto de vista institucional en la expansión internacional

de negocios: Hacia un marco conceptual más detallado

r e s u m e n

Palabras clave: A pesar de que los principios generales de la Perspectiva Internacional hayan encontrado
Negocios internacionales una amplia aceptación, hasta el momento sólo ha habido una consideración limitada de su
La teoría institucional aplicación en las estrategias de empresas individuales con negocios internacionales. Este
La comparación país artículo defiende que las empresas que participen en dichas actividades encontrarán un

∗
Corresponding author.
E-mail address: z.jin@mdx.ac.uk (Z. Jin).
http://dx.doi.org/10.1016/j.jik.2016.01.001
2444-569X/© 2016 Journal of Innovation & Knowledge. Published by Elsevier España, S.L.U. This is an open access article under the CC
BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).
118 j o u r n a l o f i n n o v a t i o n & k n o w l e d g e 1 (2 0 1 6) 117–124

vacío en relación a qué factores formales e informales de las perspectivas institucionales

se deben identificar y valorar para la expansión internacional. El objetivo de este artículo es
desarrollar un paradigma teórico que permita a las organizaciones comparar el potencial
de expansión internacional de diferentes países desde el punto de vista de la Teoría Institu-
cional basándose, al mismo tiempo, en teorías de Estrategias de Negocios Internacionales
cuando se precise. El marco teórico asume que dichas organizaciones se dedican al análisis
de acuerdos institucionales y de los recursos de los diferentes países. El artículo desar-
rolla un marco conceptual que identifica cinco componentes principales: población, poder,
rendimiento, vías de expansión internacional y productividad (definiendo productividad en
términos de conocimiento e innovación). El artículo explora cada una de estas áreas en
mayor profundidad con el objetivo de añadir una estructura más detallada a los elementos
de la Teoría Institucional relacionados con la expansión de los negocios internacionales.
© 2016 Journal of Innovation & Knowledge. Publicado por Elsevier España, S.L.U. Este es
un artı́culo Open Access bajo la CC BY-NC-ND licencia (http://creativecommons.org/
licencias/by-nc-nd/4.0/).

2005; Vasudeva, Spencer, & Teegen, 2013; Westney, 1993). Firm-

Introduction level institutional analysis can usefully draw on the work of
Scott (1995) who identified three types of institutions, namely
When the American food company Kraft (now Mondelēz Inter- the normative, regulative and cultural-cognitive. Institutional
national) acquired the UK chocolate company Cadbury in 2010 processes derive from collective experience, education, social
for $19.5 billion, it analyzed the institutional framework of its norms and mimetic societal rules. Amongst other commen-
acquisition, including its legal and tax implications, and then tators, DiMaggio and Powell (1983) proposed three principle
moved the company headquarters to Switzerland. In an ear- processes for institutional diffusion – coercive, normative and
lier move in 2002, the UK vacuum cleaner manufacturer Dyson mimetic.
moved all its manufacturing facilities from the UK to Malaysia In the context of international business strategy, this
following a careful analysis of the institutional differences paper accepts that these distinctions and processes of the
between the two countries: the Institutional Perspective on Institutional Perspective are important. However, we argue
international business strategy is a significant contributor to that they are incomplete for three reasons. First, they make
company development (Peng, Wang, & Yi, 2008). However, the the assumption that such considerations are clear and unam-
detailed factors that are important from the Institutional Per- biguous whereas such issues are complex and involve a larger
spective in international business expansion remain unclear number of stimuli than an organization can possibly process
at the present time. (March & Simon, 1958). This suggests that a paradigm identi-
Institutional theory at the macro level has been well estab- fying the major elements will be beneficial to companies. Such
lished for many years, particularly since the work of North a paradigm does not exist at the present time. Second, a static
(1990, 1994, 2005) and Scott (1995, 2001). They argued that both view of the institutional perspective assumes that companies
formal rules, such as the constitution of a country and its must accept the inevitable outcome of such institutional
legal framework, and informal constraints, such as the cus- structures and have no means of influencing or adapting to
toms of the country and its self-imposed rules of conduct, such structures. In practice, companies have choices with
need to be understood in the assessment of the business regard to countries from an institutional perspective, but
potential of a country. Thus for example, it has been widely they need a structured way of analyzing such countries. A
established that some countries are more successful than oth- more detailed paradigm of the Institutional Perspective will
ers in attracting foreign direct investment (World Bank, 2014), help companies to analyze the dynamics of both the com-
whereas other countries perform better in terms of produc- panies themselves and the changing nature of the country
tivity and innovation (Cahn & Saint-Guilhem, 2010; Gwartney, institutions in which they are potentially or actually involved
2009). Institutional theory has long offered important general (Dunning & Lundan, 2008; Teece, Pisano, & Shuen, 1997). The
insights in international literature in the field of international paradigm proposed in this paper presents such a method.
business (Dunning & Lundan, 2008). There have been analy- Third, the Institutional Perspective needs to help the ability of
ses at the country level covering international relations and companies to gain new knowledge about country institutions
political-economic issues, related at least in part to govern- and also to contribute through innovation because these two
ment and company negotiating (Eden & Potter, 1993; Hennart, topics have the potential to change the rules of the game in a
2015; Kobrin, 2001; North, 1990, 2005; Rodrick, 2000). These fundamental way with regard to country choice and company
institutional perspectives have been complemented at the negotiation with countries (Bruton, Ahlstrom, & Puky, 2009;
firm level by some individual studies of company networks, Chandler, 1986; Dunning, 1995, Chapter 5; Lynch & Jin, 2015;
culture and related sociological issues. These determine – Peng et al., 2008; Verspagen, 2006). To summarize, the broad
in part at least – the ways that companies manage, work principles of the Institutional Perspective are not sufficiently
and take decisions on international business issues (Hofstede, detailed for firms considering which countries to select when
1980; Kogut, 1992; Leung, Bhagat, Buchan, Erez, & Gibson, expanding internationally. The detailed and comprehensive
 j o u r n a l o f i n n o v a t i o n & k n o w l e d g e 1 (2 0 1 6) 117–124 119

formal and informal institutional issues that need to be iden- 1990; Tan & Wang, 2011; Zacharakis, McMullen, & Shepherd,
tified for a country and their implications for international 2007). From national and global perspectives, it has been
business expansion remain largely unexplored. Hence, the argued that institutions form the foundation and structure
purpose of this paper is to develop a theoretical framework for market and extra-market based economic and social
which enables the in-depth comparison of organizations in development. Research includes studies of international rela-
different countries regarding their potential for international tionships, international political economy and territorial
business expansion from an institutional perspective. relationships (Eden & Potter, 1993, Kobrin, 2001; Grosse, 2005).
It follows that the contribution of this paper is the devel- In addition, business historians have also explored the role
opment of a such new paradigm. It employs elements of of institutions (Jones, 2004; Jones & Khanna, 2006; Wilkins,
both institutional theory and international business theory 2001). Likewise, other perspectives include those of Hofstede
to develop a new, more detailed framework of the factors on culture (1980) and the work of a number of distinguished
that will influence the development of international business scholars on the relationship between strategic choice and
strategy at both the country and company level. To the best the formal and informal constraints bounded by institutional
of our knowledge, this is a significant gap in our existing frameworks (summarized in Peng et al., 2008: 923). From
knowledge and represents the first time that such a paradigm another wholly different perspective, both Stiglitz (1998) and
has been proposed. We argue that the paradigm will apply Sachs (2001) have offered powerful critiques of some world
in many areas of international business: developed as well institutions that have provided both policy and guidance on
as developing countries, small as well as large companies, institutional development. For the purposes of this paper, we
entrepreneurial activity as well as more commodity-oriented have chosen to focus on the institutional aspects that relate
business. Such a framework is important for companies directly to international business. Both Dunning and Lundan
engaged in international expansion strategies because it (2008) and Peng et al. (2008) have provided useful reviews and
addresses an early and important consideration in the assess- perspectives that have guided the development of the pro-
ment of which countries to enter and how to engage with host posed paradigm described in the next section.
countries beyond the entry phase (Kogut, 2002; Tallman, 2001). Finally, we note the particular importance of the insti-
The rest of this paper is structured as follows. The next sec- tutional perspective in relation to developing countries. ‘It
tion provides a general review focused on the literature of the is research on emerging economies that has pushed the
Institutional Perspective resulting in the identification of the institution-based view to the cutting edge of strategy research.
five elements of our proposed paradigm. The following section This is because the profound differences in institutional
then explains these elements in more depth. The final section frameworks between emerging economies and developed
is then a discussion of the implications of the paradigm for economies force scholars to pay more attention to these differ-
companies engaged in international business strategy. ences in addition to considering industry- and resource-based
factors’ (Peng et al., 2008: 923). Our aim with this paper is to
provide structure and guidance that will enable the practical
Literature review and theoretical background application to the international business strategy especially
for companies from emerging countries.
By ‘Institutional Perspective’, we mean both the formal In developing our structuring of the institutional perspec-
national rules – such as those from a country’s constitution, tive with regard to international business, we argue that
its legal framework and regulations – coupled with the infor- all the elements that influence this approach interact with
mal country factors – such as norms of behaviour, unwritten each other. Some elements will be more dominant in some
conventions and self-imposed rules of conduct – that deter- countries and in some contexts than others. Moreover, the bal-
mine and deliver activities in each country (North, 1990, 1994, ance will change over time and in relation to events outside
2005). Such institutional arrangements impact on organiza- the individual country. Because of these inter-relationships,
tions and individuals in indirect but influential ways (Scott, the various elements are not simply a possible list of pointers
1995, 2001, 2002). The decision-making of both organizations but form a paradigm of factors that work together in various
and individuals is consequently impacted by such institu- ways (Dunning & Lundan, 2008). We use this general sur-
tions (Hitt, Alstrom, Dacin, Levitas, & Svobodina, 2004). Thus, vey of the institutional perspective to identify the first four
the fundamental concepts of the Institutional Perspective principle elements the paradigm: namely, people, power, per-
include, ‘The beliefs, codes, cultures and knowledge that sup- formance and pathways. The outcome of these four elements
port rules and routines’ (March & Olsen, 1998: 22). In addition, then delivers the productivity impact of country institutions
institutions also deliver results, performance, outcomes and defined in terms of both the increased knowledge and new
purposefulness (Powell & DiMaggio, 1991). The institutional innovation at both the level of the industry and of individual
perspective covers policy perspectives, leadership, manage- companies: the fifth ‘P’ of the paradigm. Hence, the deliv-
ment and professionalism at both the country and company ery of enhanced productivity through increased and shared
level. As we explain later, elements of our paradigm reflect knowledge and innovation is the underpinning principle of
directly these fundamental principles and also provide under- the paradigm. This is supported from two perspectives: first,
pinning assumptions for our proposed structure. increased productivity is a widely accepted business objective
Many distinguished scholars have explored aspects of the for companies engaged in assessing international develop-
institutional perspective in the context of international busi- ment opportunities (Peng et al., 2008; OECD, 2015); second,
ness and other aspects of international political and economic the role of knowledge and innovation hardly needs exten-
activities (Chandler, 1986; Gomez & Sanchez, 2013; Porter, sive justification as being amongst the prime elements of
120 j o u r n a l o f i n n o v a t i o n & k n o w l e d g e 1 (2 0 1 6) 117–124

History and Regional

language disparities
Levels of income, Culture, gender, religion and
wealth and education social structures

Power of regions versus

National transport, national government
telecomms and power People
infrastructures Legal framework,
corporate governance
and corruption
Networks
Productivity
and clusters Pathways to Government
through and
international knowledge and Power bureaucracy
expansion innovation
Availability
of energy and Laissez-faire or
other resources dirigiste approach

Level of foreign country

export demand Taxes and other
Performance government financial
support
Size and
characteristics of Imports and exports
domestic market
Foreign direct Balance between agriculture,
investment manufacturing and services
Environmental issues

Fig. 1 – An Institutional Perspective Paradigm for international business strategy: the ‘5 P Framework’.

productivity to deliver competitive advantage and increased other forms of government. We simply remark that this is a
value (Damanpour, Walker, & Avellaneda, 2009; Grant, 1996; relevant aspect of any such analysis (Bruton et al., 2009; Keefer,
Leonard, 1995; Nonaka & Takeuchi, 1995). 2004; Kennedy, 1990; Koopman & Montias, 1971; North, 1990,
The relationship between the five factors is shown in Fig. 1. 1994; Rodrick, Subramanian, & Trebbi, 2002).
Each of these elements is then examined and justified in more Performance: The results and other outcomes of interna-
depth in the next section. tional trade policies need to be linked to other aspects of
the institution-based factors. These are mainly economic and
financial and well developed recognized in international data
The five main elements of our proposed and national statistics (see, for example, the reports of IMF
paradigm and UNCTAD 2007).
Pathways to international expansion: The policy issues of a
We begin by identifying and explaining the five main elements country, its government and its people do not necessarily and
of our proposed paradigm. We then explicate each of these immediately impact on trade and investment matters. There
elements in the section that follows. are a number of intervening elements that are essentially
People: The people of a country, including the many basic structural in their ability to deliver or hinder international
matters covered in the formal statistical analyses undertaken trade: for example, good or bad telecommunications and other
by such bodies as the World Bank and the United Nations communications services. We have attempted to identify what
to capture the main characteristics of a country such as age, we regard as the main pathway issues in the Institution Per-
social class, employment and education levels (see, for exam- spective view based on international studies of such matters
ple, World Bank Report 2014). We also include here the past (see, for example, the extensive infrastructure studies in UNC-
history and culture of a country which will have a profound TAD and World Bank Reports for 2006–2014).
influence on its future development, especially in the areas Productivity through knowledge creation and innovation: This
of innovation, entrepreneurial activity and the contribution of paper proposes that the guidance of Eisenhardt and Santos
family companies (Hofstede, 1980; Kirkman, Lowe, & Gibson, (2002: 140) is fundamental to company decision making from
2006; Leung et al., 2005; Wang, Freeman, & Zhu, 2013). There an Institutional Perspective: ‘Knowledge is conceptualized, as
have been many papers that support this element of our pro- a resource that can be acquired, transferred or integrated
posed paradigm. to achieve sustained competitive advantage.’ Both knowl-
Power: The way that a country is governed, the balance edge and its decision-making consequence, innovation, are
between the various power groups and the underpinning fundamental criteria in the process of selecting from the
political and social philosophies of a country have long been many complex potential issues that form the Institutional
established as highly influential in the development (or oth- Perspective. Hence the paradigm proposes at its centre the
erwise) of international trade. We formally note that we make concept of ‘Productivity’ defined as both the knowledge and
no judgement on the merits or demerits of the democratic and the innovation that are derived from a company analysis using
 j o u r n a l o f i n n o v a t i o n & k n o w l e d g e 1 (2 0 1 6) 117–124 121

the Institutional Perspective. More specifically, we observe downturn. Corruption has long been identified as important
that, according to OECD (2001:11), productivity “is commonly to some aspects of international business (see, for example,
defined as a ratio of a volume measure of output to a volume UNCTAD 2008 on legal issues; Dunning & Lundan, 2008 for a
measure of input use.” We also note that productivity is impor- summary of the latter two aspects).
tant as it is often linked to international competitiveness Government and bureaucracy: The role of those involved
(Van Biesebroeck, 2009), knowledge creation and innovation in setting and implementing policy with regard to interna-
(Morey, Maybury, & Thuraisingham, 2002; Nonaka & Takeuchi, tional trade and development has long been established. This
1995). aspect will also influence many other factors within the overall
paradigm. In addition, the role of bureaucracy and the degree
of flexibility in the system may also influence international
Towards a more detailed framework business (see, for example, North, 1990, 1994, 2005).
Laissez-faire or dirigiste: This basic distinction between the
Although we have identified the five main elements of the two approaches to government action and intervention has
paradigm, these are not detailed enough to allow us to analyze long been recognized as fundamental to international trade
specific international trade situations. We therefore explore (see, for example, Koopman & Montias, 1971).
each of these five headings in more depth. Taxes and other government financial support: These topics,
Under our People dimension, we have identified four main which also cover such matters as special export areas, have
elements: always had a strong influence on the way that international
Levels of income, wealth and education: The extent and levels trade has developed (see, for example, UNCTAD 2008).
of these factors have long been considered as key determinant Performance has five main elements:
of economic growth (World Bank Report 2014). In particular, Imports and exports: One of the main outcome measures of
the level of education and the knowledge of language are rel- any international trade – widely accepted in any trade analy-
evant to international trade. sis.
History and language: The background history related both Balance between agriculture, manufacturing and services: It is
to company development and more general trends with regard well-established that more advanced economies move from
to international trade and other relevant issues (North, 1990, agriculture to manufacturing and, at a later stage, increas-
1994; Stiglitz, 1998). In addition, there is a well-established lit- ingly towards a service economy (see, for example, World Bank
erature that links company history with strategy development Report 2014).
both nationally and internationally (Chandler, 1986; Jones, Environmental issues: Although these are often primarily of
2004; Teece et al., 1997). concern to the country itself, we judge that the impact on
Regional disparities: Within each country, there are often dif- neighbouring countries may become more significant over
ferences in language, culture, minority ethnic issues, wealth time. Thus, issues such as global warming and air pollution
and related matters that influence international business (see, from one country that impacts on other countries deserve to
for example, World Bank Report, 2014). be included as part of the paradigm. However, these are rel-
Culture, gender, religion and social structure: These and related atively new considerations in international trade and do not
sociological factors have long been seen as significant in necessarily have universal acceptance (see, for example, the
international business development (Hofstede, 1980; Kirkman negotiations surrounding the Kyoto Treaty).
et al., 2006; Perlmutter, 1969). We include within this aspect Foreign direct investment: Capital and fixed investment by
of our dimension, innovation and entrepreneurial orientation. foreign companies have long been established as an impor-
In addition, we highlight the relevance of family ties, family tant aspect of company performance. However, the scope of
business and family support networks in the development of this category needs to be broadened to include investment in
economic activity. knowledge, R&D and other less precise measures that may
Personal freedom: This is the extent within which individuals also impact on international business activity.
can freely move with certain area, engage economic activities, Size and characteristics of the domestic market: Porter’s
and express their ideas and concerns (Gwartney, 2009). research on the competitive advantage of nations showed that
Power covers five main areas: such issues as the competitive nature of domestic markets and
Power of regions versus national government: There are some the support structures for such markets can have an impact on
countries where important decisions with regard to inter- the international competitiveness of nations and their indus-
national business are taken at regional level rather than tries (Porter, 1990). To some extent, these are input factors that
national level. Equally, there may also be competition between might be identified in other areas of our paradigm, as well as
regional governments and a desire by regional governments performance outcomes. However, we have judged that their
to continue to support companies for their benefits to local primary impact comes in the performance of the nation so we
employment. have chosen to place them here.
Legal framework, corporate governance and corruption: There Pathways to international expansion has four main elements:
are some aspects of a country’s legal framework that impact National transport, telecoms and power infrastructures: The
either directly or indirectly on international trade issues. For costs, investment and general quality of these items are
example, issues related to foreign ownership and investment important in terms of the speed and costs of undertaking
and issues related to contract law and employment. Corporate international trade. The balance between road, rail and air
Governance has become an important issue for international transport and the distances to be covered are also important
business, as witnessed by some aspects of the 2009 global aspects of this area.
122 j o u r n a l o f i n n o v a t i o n & k n o w l e d g e 1 (2 0 1 6) 117–124

Networks and clusters: The ability of a nation to handle effi- In this sense, the 5P Framework of the Institutional
ciently (or otherwise) its imports and exports through specific, Perspective relates to the cause rather than the outcome
named locations is an important factor in international trade. of many factors that are identified in market-based and
The quality, extent and reliability of these factors will have resource-based approaches. Our proposed framework for the
a significant impact not only on costs but also on speed of Institutional Perspective hence represents a new way of struc-
response to change. turing and understanding this causality. It inevitably provides
Availability of energy and other resources: The costs of various new research opportunities for academics and implications
forms of energy, the ability of a nation to rely on its own energy for practitioners.
resources and other forms of power represent important struc-
tural influences on a nation’s ability to undertake all forms of
Acknowledgements
production and processing. These factors are important in the
general context of a nation’s economic growth but specifically
The authors thank Dr. Bal Chansarkar, and Dr. Yi Zhu, Mid-
have an impact on its ability to trade internationally.
dlesex University, UK, for their helpful suggestions on an
Level of foreign country export demand: In an increasingly
earlier version of this article. They also thank Professor Arno
smaller world with greater responsiveness to change, cheap
Haslberger, Webster University Vienna, Austria, for his care-
and reliable communications have become more important.
ful reading and suggestions for revisions to an earlier version
These matters will have an immediate impact on the ability
of this paper, Dr. Martin Sposato, and Maria Jimenez, Middle-
of a nation and its individual companies to compete interna-
sex University, for their help in the translation of the Abstract
tionally.
into Spanish. We thank the anonymous reviewers of the jour-
Productivity can be measured in a number of ways.
nal for their comments on an earlier version of the paper and
These measurements can be either quantitative or qualita-
corrections for the Spanish version of the abstract.
tive (Teng, 2014) in multiple dimensions namely: technology
change/growth, efficiency, real cost savings, production pro-
cess benchmarking, living standards, etc. It is closely linked references
to technology advance and innovation.

Bruton, G. D., Ahlstrom, D., & Puky, T. (2009). Institutional

differences and the development of entrepreneurial ventures:
A comparison of the venture capital industries in Latin
Discussion and conclusions America and Asia. Journal of International Business Studies, 40(5),
762–778.
The strength of our proposed standardized approach – the ‘5P Cahn, C., & Saint-Guilhem, A. (2010). Potential output growth in
Framework – in analyzing countries and industries is that we several industrialised countries a comparison. Empirical
have attempted to cover all the main factors from an institu- Economics, 39(1), 139–165.
tional perspective. We address two important issues: Chandler, A. (1986). The evolution of modern global competition.
In M. E. Porter (Ed.), Competition in global industries. Boston,
First, the institutional perspective is itself a broad and all-
Mass: Harvard Business School Press.
encompassing approach to international business analysis, as
Damanpour, F., Walker, R., & Avellaneda, C. (2009). Combinative
we showed in our summary of the literature on the topic. In effects of innovation types and organizational performance: A
other words, the wide-ranging nature of this perspective must longitudinal study of service organizations. Journal of
itself pose difficulties for the collection of evidence on compa- Management Studies, 46(4), 650–675.
nies and industries and for the development of any framework DiMaggio, P. J., & Powell, W. W. (1983). The iron cage revisited:
to capture such evidence. We argue that our paradigm is help- Institutional isomorphism and collective rationality in
organizational fields. American Sociological Review, 49(2),
ful in identifying and structuring the main elements. The ‘5P
147–160.
Paradigm’ therefore has value. Dunning, J. H. (1995). The globalization of business. London and NY:
Second, we argue that it assists the analytical process of Routledge.
companies engaged in international business expansion by Dunning, J. H., & Lundan, S. M. (2008). Multinational enterprises and
providing a structured and reasoned analysis of a complex the global economy (2nd ed.). Cheltenham, UK: Edward Elgar.
topic. In particular, our proposed 5P Framework offers one Eden, L., & Potter, E. H. (Eds.). (1993). Multinationals in the global
political economy. New York: St. Martins Press.
important insight that is not covered in market-based and
Eisenhardt, K. M., & Santos, F. M. (2002). Knowledge-based view:
resource-based alternative concepts (Peng et al., 2008).
A new theory of strategy? In A. Pettigrew, H. Thomas, & R.
The ‘5P Framework’ therefore represents an attempt to Whittington (Eds.), Handbook of strategy and management (pp.
reintegrate international business strategy from the Insti- 139–164). London, UK: Sage Publications.
tutional Perspectives. Gladwin, Kennelly, and Krause (1995) Gladwin, T. N., Kennelly, J. J., & Krause, T. (1995). Shifting
suggested that reintegration is one of the most important paradigms for sustainable development: Implications for
tasks for management theorist. The structural factors iden- management theory. Academy of Management Review, 20(4),
874–907.
tified by the 5P Framework – including government policies,
Gomez, C., & Sanchez, J. I. (2013). Cultural boundaries of
political beliefs, centralized decision-making, family compa-
self-justification and prospect theories in escalation of
nies, entrepreneurial tradition, national infrastructures, etc. – commitment: A US–Mexico comparison. International Journal of
are the pre-conditions that then lead to the economic factors like Human Resource Management, 24(13), 2646–2656.
low wage costs, barriers to trade and industry concentration Grant, R. (1996). Toward a knowledge-based theory of the firm.
according to our evidence. Strategic Management Journal, 17, 109–122.
 j o u r n a l o f i n n o v a t i o n & k n o w l e d g e 1 (2 0 1 6) 117–124 123

Grosse, R. (Ed.). (2005). International business and government North, D. C. (2005). Understanding the process of economic change.
relations in the 21st century. Cambridge: Cambridge University Princeton, NJ: Princeton University Press.
Press. Organization for Economic Cooperation and Development
Gwartney, J. (2009). Institutions, economic freedom, and (OECD). (2001). Measurement of aggregate and industry-level
cross-country differences in performance. Southern Economic productivity growth.. Available at: www.oecd.org/std/
Journal, 75(4), 937–956. productivitystatistics2352458.pdf (accessed 21.09.15)
Hennart, J. (2015). Leveraging Asian institutions to deepen theory: OECD. (2015). The future of productivity. Paris: OECD Publishing.
A transaction cost perspective on relational governance. Asian http://dx.doi.org/10.1787/9789264248533-en
Business & Management, 14(4), 257–282. Peng, M., Wang, D. Y. L., & Yi, J. (2008). An institution-based view
Hitt, M. A., Ahlstrom, D., Dacin, M. T., Levitas, E., & Svobodina, L. of international business strategy: A focus on emerging
(2004). The institutional effects on strategic alliance partner economies. Journal of International Business Studies, 39, 920–936.
selection in transition economies: China vs Russia. Perlmutter, H. V. (1969). The tortuous evolution of the
Organization Science, 15(2), 173–185. multinational corporation. Columbia Journal of World Business,
Hofstede, G. (1980). Culture’s consequences: International differences 4, 9–18.
in work-related values. Beverley Hills, CA: Sage. Porter, M. E. (1990). The competitive advantage of nations. London:
Jones, G. (2004). Multinationals and global capitalism: From the Macmillan.
nineteenth to the twenty first century. Oxford: Oxford University Powell, W. W., & DiMaggio, P. J. (Eds.). (1991). The new
Press. institutionalism in organizational analysis. Chicago: University of
Jones, G., & Khanna, T. (2006). Bringing history (back) into Chicago Press.
international business. Journal of International Business Studies, Rodrick, D. (2000). Institutions for high quality growth: What they
37(4), 453–468. are and how to acquire them. Studies in Comparative
Keefer, P. (2004). What does political economy tell us about economic International Development, 35(3), 3–31.
development – and vice versa? Washington, DC: World Bank Rodrick, D., Subramanian, A., & Trebbi, F. (2002). Institutions rule:
Policy Research Working Paper 3250. The primacy of institutions over geography and integration in
Kennedy, P. (1990). The rise and fall of the great powers. London: economic development. Cambridge, MA: NBER Working Paper
Fontana Press. 9305.
Kirkman, B. L., Lowe, K. B., & Gibson, C. B. (2006). A quarter Sachs, J. D. (2001). Tropical underdevelopment. Weltvirtschaftliches
century of culture’s consequences: A review of empirical Archiv/Review of World Economics, 136(4), 579–600.
research incorporating Hofstede’s cultural values framework. Scott, W. R. (1995). Introduction: Institutional theory and
Journal of International Business Studies, 37(3), 285–320. organizations. In W. R. Scott, & S. Christensen (Eds.), The
Kobrin, S. J. (2001). Sovereignty at bay: Globalization multinational institutional construction of organizations: xi–xxiii. Thousand
enterprise and the international political system. In Rugman, Oaks, CA: Sage Publications.
& Brewer (Eds.), The Oxford handbook of international business Scott, W. R. (2001). Institutions and organizations. Thousand Oaks,
(pp. 181–205). Oxford: Oxford University Press. CA: Sage Publications.
Kogut, B. (1992). National organizing principles of work and the Scott, W. R. (2002). The changing world of Chinese enterprise: An
erstwhile dominance of the American multinational institutional perspective. In A. S. Tsui, & C. M. Lau (Eds.), The
corporation. Industrial and Corporate Change, 1(2), 285–325. management of enterprises in the People’s Republic of China: 59–78.
Kogut, B. (2002). International management and strategy. In A. London: Kluwer Academic Publishers.
Pettigrew, H. Thomas, & R. Whittington (Eds.), Handbook of Stiglitz, J. E. (1998). Towards a new paradigm for development
strategy and management (pp. 261–278). London: Sage. (Prebisch Lecture). Geneva: UNCTAD.
Koopman, K., & Montias, J. M. (1971). On the description and Tallman, S. (2001). Global strategic management. In M. A. Hitt, R.
comparison of economic systems. In A. Eckstein (Ed.), E. Freeman, & J. S. Harrison (Eds.), The Blackwell handbook of
Comparison of economic systems: Theoretical and methodological strategic management (pp. 464–490). Oxford: Blackwell Business.
approaches. Berkeley, CA: University of California Press. Tan, J., & Wang, L. (2011). MNC strategic responses to ethical
Leonard, D. (1995). Wellsprings of knowledge. Boston, MA: Harvard pressure: An institutional logic perspective. Journal of Business
Business School Press. Ethics, 98(3), 373–390.
Leung, K., Bhagat, R. S., Buchan, N. R., Erez, M., & Gibson, C. B. Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities
(2005). Culture and international business: Recent advances and strategic management. Strategic Management Journal, 18(7),
and their implications for future research. Journal of 509–533.
International Business Studies, 36(4), 357–378. Teng, H. S. (2014). Qualitative productivity analysis: Does a
Lynch, R., & Jin, Z. (2015). Knowledge and innovation in emerging non-financial measurement model exist? International Journal
market multinationals: The expansion paradox. Journal of of Productivity & Performance Management, 63(2), 250–256.
Business Research, UNCTAD. http://wir2008 en.pdf
http://dx.doi.org/10.1016/j.jbusres.2015.10.023 [Available Van Biesebroeck, J. (2009). Disaggregate productivity
online: 23rd October, 2015] comparisons: Sectoral convergence in OECD countries. Journal
March, J. G., & Olsen, J. P. (1998). The institutional dynamics of of Productivity Analysis, 32(2), 63–79.
international political orders. International Organization, 52, Vasudeva, G., Spencer, J. W., & Teegen, H. J. (2013). Bringing the
943–969. institutional context back in: A cross-national comparison of
March, J. G., & Simon, H. A. (1958). Organizations. NY: Wiley. alliance partner selection and knowledge acquisition.
Morey, D., Maybury, M., & Thuraisingham, B. (Eds.). (2002). Organization Science, 24(2), 319–338.
Knowledge management: Classic and contemporary works. Verspagen, B. (2006). Innovation and economic growth. In J.
Cambridge, Mass: The MIT Press. Fagerburg, D. C. Mowery, & R. R. Nelson (Eds.), The Oxford
Nonaka, I., & Takeuchi, H. (1995). The knowledge-creating company. handbook of innovation (pp. 487–513). Oxford: Oxford University
Oxford: Oxford University Press. Press.
North, D. C. (1990). Institutions, institutional change and economic Wang, D., Freeman, S., & Zhu, C. J. (2013). Personality traits and
performance. Cambridge: Cambridge University Press. cross-cultural competence of Chinese expatriate managers: A
North, D. C. (1994). Economic performance through time. socio-analytic and institutional perspective. International
American Economic Review, 84(3), 359–368. Journal of Human Resource Management, 24(20), 3812–3830.
124 j o u r n a l o f i n n o v a t i o n & k n o w l e d g e 1 (2 0 1 6) 117–124

Westney, D. E. (1993). Institutionalization theory and the World Bank. (2014). The World Bank annual report 2014.
multinational corporation. In S. Ghoshal, & D. E. Westney Washington, DC: © World Bank. https://openknowledge.
(Eds.), 1993 Organization theory and the multinational corporation worldbank.org/handle/10986/20093
(pp. 53–76). London: Macmillan. Zacharakis, A. L., McMullen, J. S., & Shepherd, D. A. (2007).
Wilkins, M. (2001). The history of multinational enterprise. In A. Venture capitalists’ decision policies across three countries:
Rugman, & T. L. Brewer (Eds.), The Oxford handbook of An institutional theory perspective. Journal of International
international business (pp. 3–35). Oxford: Oxford University Business Studies, 38(5), 691–708.
Press.