Legitimacy Contexts of BoP Markets: Characterization and Implications for Supply Chain Functions

An important market that is receiving increasing attention by firms relates to the poorest at the Base of the Pyramid (BoP). BoP businesses contribute to the first UN Sustainable Development Goal that calls for an end to poverty in all its manifestations. BoP businesses are regarded as financially and socially beneficial for both participating firms and poor communities. It is, however, understood that success in BoP markets cannot (and should not) be assumed, as it demands a profoundly different view towards managing supply chains. Focusing on this issue, our conceptual study contributes to the emerging debates in BoP and supply chain management research by elaborating the notion of legitimacy contexts (LCs) at BoP. We draw on institutional theory to characterize the LCs in BoP markets and discuss their implications for key supply chain functions. We argue that firms often design their supply chain functions for BoP business using their own LCs as opposed to those of BoP actors. This implies ignoring the institutional distance between BoP markets and firms and reveals a key culprit in the failure of BoP projects. We offer practical implications for firms intending to engage in BoP business.

Social Environment and Healthy Investment Behavior: Joint Influence of Culture and Institution on China

The influence of the social environment on healthy investment behavior is a vital research topic. This paper focuses on foreign direct investment (FDI) as an important part of its broad impact in improving the level of capital circulation and diversifying the non-systemic risk of a single country portfolio. Using data from 35 countries on direct investment in China, we find that the impact of the social environment on healthy investment behavior is mainly reflected in investors’ resistance to cultural distance and their benefit compensation across institutional distance. In addition, their joint influence is still negative, dominated by cultural distance, which can still verify that institutional distance mitigates the negative effect of cultural distance on FDI. Therefore, in order to promote international healthy investment behavior, it is feasible to improve both the mitigation effect of the institution in the short term and promote the level of cultural exchange in the long term, according to the research results of this paper.

Elements of the anthropological theory of didactics in the selection of contents in a course of fluid mechanics in engineering, a case study in Spanish universities

The Anthropological Theory of Didactics has been applied to the field of didactics of mathematics with remarkable success. Fluid Mechanics is a discipline with a strong mathematical background, where mathematics is used for modeling the continuous nature. In addition, the Fluid Mechanics concepts are essential for the future engineer or scientist. For this reason, it is worth thinking whether the content that developed in engineering schools or science faculties are those demanded by the future professionals. The analysis has been done within the context of a case study framed in the Spanish noosphere, more particularly Universities and Companies. In this direction, the objective of this article is to know the institutional distance between the University and society as a demander of technologies based on Fluid Mechanics. To this end, the methodology based on the issuance of a questionnaire to experts focused on aspects such as present and emerging content associated with the Fluid Mechanics of an engineering degree is used. Note that the number of experts selected is reduced so as to consider the study as a sourcing for introducing expert thoughts on the fluid mechanics conception between university and companies. The results highlight the existence of an institutional distance between the University and the Enterprise (as a technology executor) in the conception of contents, thus establishing an area of potential improvement within the noosphere associated with fluid mechanics in Spain. Highlights Questionnaire to experts to understand the current institutional relations between University and Company in the Spanish system. Application of the Anthropological Theory of Didactics (ATD) techniques to Fluid Mechanics. Confirmation of an institutional distance between University and Companies in Fluid Mechanics conceptions.

The Relative Effects of Institutions on Ownership in Acquisitions

<p>Purpose - Globalization has increased competition to an international level. However, limited market experience causes uncertainty, affecting how firms strategize their entry. Institutional distance can be a dominant cause of such environmental uncertainty. The institutional environment incorporates three institutional pillars; the regulatory pillar, the normative pillar and the cognitive pillar. Institutions are shaped by culture and desires to protect domestic business, meaning institutions differ between countries. This is known as institutional distance. There is, however, a research gap concerning the relative influence of institutional pillars on cross-border acquisition ownership, when institutional distance is present. This thesis seeks to research the influential effect of all three institutional pillars on acquisition ownership, when firms are faced with institutional distance. Theory - Institutional theory was the fundamental theory used in this research, applying the sociology perspective of Scott (1995). Firstly, investigations were conducted on individual pillars to see how each pillar influenced acquisition ownership. Secondly, individual pillar findings were then combined and compared, to illustrate their relative influence on acquisition ownership. Such simultaneous acknowledgement of all three institutional pillars, provided new insight on the relative effects of institutions on acquisition ownership. Methodology - This study implemented a single method approach, using quantitative analysis. Archival data was gathered focusing on firms from three industries in eleven selected countries who conduct cross-border acquisitions (CBAs). CBAs were chosen due to their popular use as a research construct in imitation research. Cognitive distance, normative distance and regulatory distance were then used to measure institutional distance. Cognitive distance effects were measured using frequency based imitation. Normative distance was measured using two of Hofstede’s (1980) cultural value dimensions: uncertainty avoidance and collectivism. Regulatory distance was measured using World Bank Governance Indicators. Thus, it was important to strategically choose home countries to ensure a variety of dimension and indicator values with which to conduct a reliable study. Logistic regression, conducted with STATA, was then used to analyze relationships between institutions and acquisition ownership. Key Findings – The findings illustrate that all three institutional pillars have an influential effect on acquisition ownership decisions. This reinforces the emerging belief, that studies must include all three institutional pillars in research. This finding adds to this scant research. Analyzing the comprehensive institutional environment produces more reliable results. The findings suggest that institutional pillars form an institutional hierarchy when institutional distance exists between the home and host countries. Regulatory distance have the strongest influence on acquisition ownership. Severe regulatory sanctions threaten illegitimate behaviours, forcing foreign entrants to prioritize compliance to regulatory institutions. Normative distance has the second strongest impact on acquisition ownership. Its tacit nature camouflages dysfunctional cultural complexities that disrupt strategy implementation, which can cause a firm to relocate. Lastly, cognitive distance has the third strongest influence on acquisition ownership. Its lack of severe repercussions facilitates the prioritization of the previous two pillars. However, cognitive distance acknowledgement is important as it illustrates how host participants interpret stimuli from their environment, which informs foreign entrants of appropriate cross-national responsive behaviour. Contributions - This study contributes to international business research by illustrating the hierarchical formation of the influence of institutional pillars on cross-border acquisition ownership, where institutional distance is present. This contribution has managerial implications. Managers are strongly encouraged to consider all of regulatory pillar, normative pillar and cognitive pillar when venturing abroad. Further, managers must acknowledge the institutional pillar hierarchy and prioritize responses accordingly, to avoid crippling outcomes that could lead to poor acquisition outcomes. Lastly, this thesis contributes to literature by highlighting the need to include collectivism as a research construct in ownership studies. Prior studies have narrowly focused on uncertainty avoidance and power distance. However, collectivism has been observed to influence ownership, likely due to the recent rise of Asia in international business.</p>

The Relative Effects of Institutions on Ownership in Acquisitions

<p>Purpose - Globalization has increased competition to an international level. However, limited market experience causes uncertainty, affecting how firms strategize their entry. Institutional distance can be a dominant cause of such environmental uncertainty. The institutional environment incorporates three institutional pillars; the regulatory pillar, the normative pillar and the cognitive pillar. Institutions are shaped by culture and desires to protect domestic business, meaning institutions differ between countries. This is known as institutional distance. There is, however, a research gap concerning the relative influence of institutional pillars on cross-border acquisition ownership, when institutional distance is present. This thesis seeks to research the influential effect of all three institutional pillars on acquisition ownership, when firms are faced with institutional distance. Theory - Institutional theory was the fundamental theory used in this research, applying the sociology perspective of Scott (1995). Firstly, investigations were conducted on individual pillars to see how each pillar influenced acquisition ownership. Secondly, individual pillar findings were then combined and compared, to illustrate their relative influence on acquisition ownership. Such simultaneous acknowledgement of all three institutional pillars, provided new insight on the relative effects of institutions on acquisition ownership. Methodology - This study implemented a single method approach, using quantitative analysis. Archival data was gathered focusing on firms from three industries in eleven selected countries who conduct cross-border acquisitions (CBAs). CBAs were chosen due to their popular use as a research construct in imitation research. Cognitive distance, normative distance and regulatory distance were then used to measure institutional distance. Cognitive distance effects were measured using frequency based imitation. Normative distance was measured using two of Hofstede’s (1980) cultural value dimensions: uncertainty avoidance and collectivism. Regulatory distance was measured using World Bank Governance Indicators. Thus, it was important to strategically choose home countries to ensure a variety of dimension and indicator values with which to conduct a reliable study. Logistic regression, conducted with STATA, was then used to analyze relationships between institutions and acquisition ownership. Key Findings – The findings illustrate that all three institutional pillars have an influential effect on acquisition ownership decisions. This reinforces the emerging belief, that studies must include all three institutional pillars in research. This finding adds to this scant research. Analyzing the comprehensive institutional environment produces more reliable results. The findings suggest that institutional pillars form an institutional hierarchy when institutional distance exists between the home and host countries. Regulatory distance have the strongest influence on acquisition ownership. Severe regulatory sanctions threaten illegitimate behaviours, forcing foreign entrants to prioritize compliance to regulatory institutions. Normative distance has the second strongest impact on acquisition ownership. Its tacit nature camouflages dysfunctional cultural complexities that disrupt strategy implementation, which can cause a firm to relocate. Lastly, cognitive distance has the third strongest influence on acquisition ownership. Its lack of severe repercussions facilitates the prioritization of the previous two pillars. However, cognitive distance acknowledgement is important as it illustrates how host participants interpret stimuli from their environment, which informs foreign entrants of appropriate cross-national responsive behaviour. Contributions - This study contributes to international business research by illustrating the hierarchical formation of the influence of institutional pillars on cross-border acquisition ownership, where institutional distance is present. This contribution has managerial implications. Managers are strongly encouraged to consider all of regulatory pillar, normative pillar and cognitive pillar when venturing abroad. Further, managers must acknowledge the institutional pillar hierarchy and prioritize responses accordingly, to avoid crippling outcomes that could lead to poor acquisition outcomes. Lastly, this thesis contributes to literature by highlighting the need to include collectivism as a research construct in ownership studies. Prior studies have narrowly focused on uncertainty avoidance and power distance. However, collectivism has been observed to influence ownership, likely due to the recent rise of Asia in international business.</p>

The impacts of institutional differences in relation to intellectual property rights protection on foreign market direct investment: FDI inflows and modes of foreign market entry

<p>This Master‘s thesis seeks to consider the impacts of institutional distance regarding IPR protection on Foreign direct investment’s (FDI) internationalization strategies. Estimated at approximately US$ 1.8 trillion in 2015 and sitting at its highest level since the global economic and financial crisis in 2008 (UNCTAD, 2016), FDI flows are fast becoming a focal issue of global business. Developing Asia, for example, has emerged as the world’s largest FDI recipient region in the world, which has attracted a wide and public attention. China, in particular, is the largest recipient of FDI among the emerging economies. In 2014, it overtook the US as the most popular destination for multinational enterprises (MNEs). To date, most academic interest has focused on how the institutional environment of the host country affects both the overall volumes of FDI (e.g., Lee & Mansfield, 1996; Smarzynska Javorcik, 2004), and the modes of entry strategy (e.g., McCalman, 2004; Dikova & Witteloostuijn, 2007). However, other areas of research also consider institutional distance, and the magnitudes and asymmetric effects of institutional distance (e.g., Cuervo-Cazurra & Genc, 2011; Phillips, Tracey, & Karra, 2009; Zaheer et al., 2012). In this context, this thesis, uses China as a sample of FDI recipient to seek to understand how the directions of institutional distance affect FDI’s flows and MNEs’ choice of entry mode into the host country. In particular, the research questions being addressed in this study are: (1) How does the bidirectional distance between home and host country regarding IPR protection affect FDI’s inflows to China? and (2) How does this bidirectional distance regarding IPR protection influence MNEs’ choice of entry mode? Using a quantitative research design, two dependent variables are examined in this study: FDI inflows and entry mode (wholly-owned subsidiaries (WOS) versus joint ventures (JVs)). Using the institutional theory as its theoretical underpinning, this study hypothesizes that IPR distance between home and host countries negatively affects FDI inflows to the host market. It also hypothesizes that IPR distance is positively related to MNEs’ choice of WOS as an entry mode as opposed to JVs. Both hypotheses build on the new notion regarding the directions of institutional distance that MNEs’ strategies and behaviours are divided into positive and negative directions. This consideration of directions of institutional distance differs to that of the general institutional approach, which typically clusters all regulative, normative and cognitive pillars within the institutional distance. However, this research focuses on the single regulative distance of IPR protection. Using the 691 collected observations of FDI flows to China from 2006 to 2012, hypothesis 1 was tested by employing the estimation techniques of panel linear regression. To further assess hypothesis 2, 801 instances of foreign market entry of FDI in China between 2008 and 2012 were analysed by logistic regression. From the panel linear regression model, the empirical results show that the larger the distance of IPR protection between home and host countries, the fewer the flows of FDI that entered into China. Such results are consistent with previous mainstream literature suggesting that greater institutional distance significantly diminishes the MNEs’ intentions to invest (e.g., Du, 2009; Berry et al., 2010). Moreover, logistic regression for hypothesis 2 reveals that IPR distance appears to be significantly and positively associated with the choice of WOS. This means that the tendency of MNEs from countries with a higher distance of IPR protection to enter China’s market by means of WOS (as opposed to JVs) will decrease. This result is in line with previous studies that note that larger institutional distance is associated with a lower level of equity ownership mode, such as JVs over WOS (e.g., Xu et al., 2004; Xu & Shenkar, 2002; Estrin et al., 2009). The greatest takeaway from this study is that it advances knowledge about the impact of the directions of IPR distance and provides new opinions on the debate around the asymmetric effect of institutional distance on internationalization decisions. This study also offers practical implications for both firm managers and public policy makers.</p>

The role of institutional quality in the international trade of a Latin American country: evidence from Colombian export performance

This paper analyses the relevance of Colombian institutional quality in recent years in terms of the performance of its exports within a framework of trade openness. Based on the trade gravity model, we examine the effect of governance on the evolution of Colombian exports through an econometric approach that identifies, on the one hand, the influence of institutional quality, and on the other hand, the influence of the institutional distance between Colombia and its trading partners. We use a panel data set for 2005–2018, through which the export flows from Colombia to 136 of its trading partners are considered. The findings indicate that Colombian institutional quality and the institutional distance between the country and its partners are statistically significant and affect its foreign sales. Similarly, there is a prominent influence of regulatory quality and the rule of law variables in the performance of Colombian exports in relation to other variables included in the model. We conclude that the Colombian government must improve its institutional quality considerably as a fundamental step towards boosting its overseas sales, not least because the country’s institutional distance from the world average is notable, which also affects its exports.

The moderating role of subsidiary size on the association between institutional distance and subsidiary’s access to complementary local assets: evidence from Vietnam

Purpose This study aims to investigate the moderating effects of subsidiary size on the association between institutional distance and subsidiary’s access to complementary local assets (ACLA) in a transition economy. Design/methodology/approach The data of 1,027 subsidiaries located in Vietnam were extracted from the survey of General Statistics Office of Vietnam. Hausman’s test shows that random effect model is appropriate to estimate the moderating effects of subsidiary size on the association between the institutional distance and subsidiary’s ACLA. Findings The findings revealed that the greater formal and informal institutional distances between home and host countries, the lower a subsidiary’s ACLA in a transition economy. In addition, larger subsidiaries’ ACLA in a more formal and informal institutional distant country are higher than smaller subsidiaries. Research limitations/implications Multinational enterprise (MNEs) have a continuous need to use their foreign subsidiaries operating in host countries, particularly those with transition economies, to overcome institutional differences to ACLA in a transition economy. In addition, subsidiaries should be invested with greater resources to collaborate with local partners to serve for accessing to complementary local assets in transition economy characterized by an uncertainty institutional environment. Originality/value By integrating the institutional theory and the resource-based view, the study developed a theoretical model about the moderating role of subsidiary size on the association between institutional distance and subsidiary’s ACLA in transition economy. The findings confirmed that simultaneously applying the institutional theory and the resource-based view to investigate location-specific advantages exploitation of subsidiaries is relevant not only in developed economies but also in a transition economies.