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While the strategic importance of institutions to firms’ performance is well recognised in IB, the nexus between institutions and agency1 (i.e., purposeful action by entrepreneurial individuals, groups or organisations) remains under-developed. The aim of this JWB special issue is to stimulate work that promotes new theory and empirical, public policy and practitioner insights on the relationship between institutions (residing at various levels of analysis) and agency in international business.
Institutions – whether formal or informal, whether internal or external to the firm – are largely taken-for-granted, culturally-embedded understandings of appropriate social arrangements and behaviours. Early perspectives in neo-institutional theory emphasised the power of institutions to determine patterns of action and organisation, thereby explaining the convergence of MNEs and managerial practices within the same institutional environment. That is, firm and individual behaviour was viewed as being shaped and constrained by pre-existing formal and informal institutions that reside at the country or international levels of analysis (e.g., laws, intellectual property rights protection regimes, financial market institutions, national culture). Deviations from institutional norms are counteracted by sanctions or seen as imposing significant costs on the ‘offending’ firm or individual.
This early approach remains a strong tradition in IB research examining the nexus of firms and institutions. Particularly prominent at present are studies that examine country-level institutional profiles, how institutional environments determine the most effective strategies and structures for a diversity of firms, how institutions facilitate or impede the diffusion of organisational practices throughout MNEs, and the institutional transformation of transition or emerging economies and its impact on firms. Concepts such as institutional distance, liability of foreignness and MNE or international new venture legitimacy hold wide appeal, but less attention is given to agency as purposeful action on the part of individuals, groups or organisations in maintaining or shaping existing institutions and creating new ones. Only a narrow range of institutions are typically considered, and studies of antecedents and consequences – rather than process, process drivers and co-evolution – continue to dominate.
Institutions, however, do not only constrain, but also are outcomes of human agency (i.e., purposive actions). Organisational actors (individuals, firms, coalitions, etc.,) are not only bound by institutions, but also enact and reconstruct them. As a corollary, the role that organisations and individuals play in institutional creation, maintenance and change has come to the fore in academic debates, primarily outside IB. The recent concept of ‘institutional entrepreneurship’, whereby institutional entrepreneurs purposefully mobilise resources to create new institutions or change existing ones for their own interests, is illustrative of this shift towards active agency in an institutional context.2 Similarly, agency is central to co-evolutionary perspectives that connect patterns of institutional change in wider business systems with more micro processes of variety generation and experimentation within and across individual firms.3 As recent research demonstrates, an approach that de-emphasises these co-evolutionary dynamics and institutional entrepreneurship is perhaps not even applicable to the case of small firms that internationalize, let alone large MNEs. The substantial institutional contradictions inherent in the international business environment bring to the fore the role of agency and a state of continuous institutional change. This distinctiveness of the international business context invites longitudinal process-oriented studies. It also holds potential for stronger theory testing and building at the intersection of institutions and agency, and eventually the export of new or refined theories from IB scholarship to adjacent disciplines.4
Through this special issue, we wish to encourage in international business research this emerging and more nuanced view of the nexus between agency and institutions residing at various levels of analysis. In doing so, we join scholars who have considered institutions as constraints, enablers and outcomes of agency, and have explored the processes of institutional creation, maintenance and change in the IB context.
The sorts of questions contributors to this special issue might ask include, but are by no means limited to, the following:
How are new structures, practices and identities created, diffused and institutionalised within MNEs, and how are old ones changed or discarded? What role might individuals, subsidiaries and headquarters play in such institutional entrepreneurship? How does competition among institutional entrepreneurs with different interests unfold within MNEs and what are the consequences of such competition?
Under what conditions are MNEs able to act as institutional entrepreneurs, mobilising resources to transform existing local or global institutions or create new ones for their own interests?
To what extent may smaller firms and entrepreneurs, often with minimal market power and facing severe resource constraints, act as agents of institutional change across borders?
Do MNEs have particular advantages in bringing about innovations in institutions? For example, does multinationality help overcome the ‘paradox of embedded agency’, i.e., the inherent contradiction in the notion that agents conditioned by an institution can act to change it?
How does institutional duality, i.e., the need for MNE subsidiaries to conform to both host-country and home-country institutions for legitimacy, manifest in international business, and how are tensions and opportunities creatively managed as seemingly incommensurable institutions collide? To what extent do the challenges of institutional duality affect the management of smaller firms internationalising?
How do institutions at various levels – supranational, regional, national, industry, within firms – and MNE strategies interact and co-evolve? How do the (not necessarily coordinated) actions of various actors (e.g., trade blocs, governments, NGOs, interest groups, MNEs and managers or employees) influence and, in turn, are influenced by the evolution of these institutions?
How do institutions at the sub-national and national levels interact to influence MNE decisions and strategies (e.g., location within a host-country)? Over time, how do these institutions and MNE strategies co-evolve?
How do institutional entrepreneurship and co-evolutionary processes affect the home and host countries of the MNE? How should the ensuing transformations be evaluated, and with what consequences for public policy?
Papers that respond to this call should be forwarded to [log in to unmask] by 1 October 2013. Authors should follow the JWB author and style requirements, available athttp://www.elsevier.com/wps/find/journaldescription.cws_home/620401/authorinstructions. The anticipated publication date is 2015.
All submissions will be expected to develop strong theoretical foundations and implement rigorous methodologies within their chosen tradition or perspective, and are subject to JWB review procedures. The special issue welcomes a broad range of methodologies in enhancing our understanding of the aforementioned processes. We expect contributions from a diversity of disciplines that inform international business, including sociology, political science, anthropology, psychology, economics, socio-linguistics, and technology studies, among others. We also seek to explore a diversity of geographic and organisational contexts. Both conceptual and empirical papers are welcome.
Enquiries about the special issue may be made to any of the special issue co-editors:
Sara L. McGaughey, Griffith University, Australia ([log in to unmask])
Arun Kumaraswamy, Temple University, United States ([log in to unmask])
Peter W. Liesch, University of Queensland, Australia ([log in to unmask])
Whereas the terms “agent” and “agency” have specific meanings (i.e., a principal–agent contractual relationship) in agency theory, we use “agent” to refer to any purposive actor (an individual or an organisation), and “agency” to refer to the capacity of such an actor to act wilfully (e.g., see definition of agency in Oxford English Dictionary).
See, for example, McGaughey, S.L. (2012). Institutional entrepreneurship in North American lightning protection standards: Rhetorical history and unintended consequences of failure. Business History, 55(1): 73-97.
See, for example, Cantwell, J., Dunning, J.H. and Lundan, S.M. (2010). An evolutionary approach to understanding international business activity: The co-evolution of MNEs and the institutional environment. Journal of International Business Studies, 41(4): 567–586.
See, for example, Kostova, T., Roth, K. and Dacin, M.T. (2008). Institutional theory in the study of multinational corporations: A critique and new directions. Academy of Management Review, 33(4): 994–1006.
Sara L. McGaughey, PhD
Department of International Business and Asian Studies
Griffith Business School, Griffith University
Room 1.70 Macrossan Building N16, Nathan Campus
170 Kessels Road, Nathan
Brisbane, Queensland 4111, AUSTRALIA
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Sara L. McGaughey, PhD
Department of International Business and Asian Studies
Griffith Business School, Griffith University
Room 1.70 Macrossan Building N16, Nathan Campus
170 Kessels Road, Nathan
Brisbane, Queensland 4111, AUSTRALIA
Please consider our environment before printing this email