Institutional Strategies in Emerging Markets

TLDR

In challenging emerging‑market environments, shaping the institutional environment is especially critical to an organization’s performance and long‑term survival. The study reviews and integrates literature on how organizations navigate institutionally diverse settings to capture rents outside the marketplace. The authors define institutional strategies as comprehensive plans and actions to leverage and shape socio‑political and cultural institutions for competitive advantage, and focus their review on emerging markets characterized by weak capital markets, regulatory infrastructures, and rapid change. The review identifies three institutional strategy sets—relational, infrastructure‑building, and socio‑cultural bridging—and calls for cross‑disciplinary dialogue to advance research on emerging markets and institutional theory.

Abstract

We review and integrate a wide range of literature that has examined the strategies by which organizations navigate institutionally diverse settings and capture rents outside of the marketplace. We synthesize this body of research under the umbrella term institutional strategies, which we define as the comprehensive set of plans and actions directed at leveraging and shaping socio-political and cultural institutions to obtain or retain competitive advantage. Our review of institutional strategies is focused on emerging market contexts, settings that are characterized by weak capital market and regulatory infrastructures and fast-paced turbulent change. Under such challenging conditions, strategies aimed at shaping the institutional environment may be especially critical to an organization's performance and long-term survival. Our review reveals that organizations engage in three specific and identifiable sets of institutional strategies, which we term relational, infrastructure-building, and socio-cultural bridging. We conclude by highlighting fruitful avenues for cross-disciplinary dialogue in the hope of promoting future research on emerging markets and defining the next frontier of institutional theory in organizational analysis.