Institutional duality incidence on subsidiaries: configuration, differentiation and avoidance strategies

PurposeTo illustrate how threats of institutional duality (ID) incidence subsidiaries confront are converted to opportunities, by conceptualizing how subsidiaries attain operational legitimacy at both their headquarters (HQs) and host countries.Design/methodology/approachUsing a systematic literature review, the authors build on institutional theories by analyzing the ID literature along its structure, main processes and outcomes. The authors configure frameworks of both HQ control systems and host countries' institutional threats, showing how subsidiaries contingently navigate across them using configuration, differentiation and avoidance strategies.FindingsThe authors’ findings show that “foresighted” subsidiaries attain operational legitimacy through configuration, differentiation and avoidance of threats incidental to ID, by strategizing along certain formal and informal institutional variables including legal, sociocultural and technical factors.Originality/valueThe authors propose “structural configuration of ID incidence” and “subsidiary path to legitimacy” frameworks. The former configures how the interaction between HQ and host countries' variables constitute ID incidence threats. The latter highlights how “foresighted” subsidiaries use configuration, differentiation and avoidance strategies to attain operational legitimacy.

Does the Choice of IJV under Institutional Duality Promote the Innovation Performance of Chinese Manufacturing Firms? Evidence from Listed Chinese Manufacturing Companies

The relationship between the strategic choice of internationalization under institutional duality and the performance of emerging market multinational enterprises (EM-MNEs) will become a focal point for scholars, practitioners and policy makers in the future. In order to better understand the determinants of the entry mode choice under institutional duality for EM-MNEs, based on the sample of Chinese manufacturing listed companies ‘going out’ from 2003 to 2015, we investigated the impact of organization institutional inertia and host-country institutional quality on the choice of the international joint venture (IJV) of Chinese manufacturing firms, as well as the effect and potential problems of the IJV choice on the firms’ innovation performance under institutional duality. The main results of our empirical analyses provide evidence that the response to institutional duality means that Chinese firms have the possibility to choose IJV in entry modes ahead of their capability support, and subject to insufficient professional field accumulation, cross-cultural management and joint governance capability, this premature choice of IJV actually hinders their innovation efficiency. Furthermore, the test on the influence of firm heterogeneity found that, when the firm is privately owned or has a lower internationalization breadth, the above negative moderating effect of IJV choice is more significant. Our findings enrich the literature on the relationship between the strategic choice of internationalization and innovation performance of EM-MNEs, and provide inspiring and straightforward empirical evidence.

The dilemma of institutional duality and multinational firms 1967-2017

Purpose The purpose of this paper is to improve the understanding of the dilemma of institutional duality (ID) confronting multinational corporations and to propose a workable solution for this problem. Design/methodology/approach The author has searched the literature using several terms directly related to the dilemma of ID and multinational firms. Findings The findings reveal that to attain “legitimacy”, subsidiaries strive to balance institutional pressures stemming from external environments in the host country and their parent organizations. Understanding institutional theories of multinational corporations enables the subsidiaries to manage external pressures. ID impact varies among subsidiaries, depending on institutional contexts and internal strategies of subsidiaries. Originality/value An “institutional duality incidence model” portraying how dual institutions make “legitimacy” problematic for subsidiaries is proposed. A framework for identifying factors generating ID dilemma and their management approach is also proposed. It is concluded that a multinational corporation that recognizes ID as a central concern is more likely to achieve and maintain a higher level of harmony with its subsidiaries and host countries.