Diaspora entrepreneurs as institutional change agents: The case of Thamel.com

Diasporans are migrants and their descendants who maintain a relationship to their country of origin (Safran, 1991). Diasporans who establish new ventures in their countries of origin comprise a special case of international ethnic entrepreneurship.In countries of settlement, diasporans confront institutional environments that often are quite different than those that exist in their countries of origin. We refer to the exposure to and adoption of institutional roles and relationships associated with a new cultural setting as “institutional acculturation.”Most extant work in management and marketing focuses on how a migrant's acculturation affects his/her behavior in the new country of residence. We shift the analytical lens to the country of origin. Utilizing a case study from Nepal, we demonstrate how institutional acculturation can inspire a diaspora entrepreneur to transform institutional arrangements in his/her country of origin and generate dramatic change in society's role expectations of the government, suppliers, and buyers.     

Agency and institutional influences on franchising decisions

While the franchising literature has typically relied on agency theory, efficiency considerations may not fully explain decisions to expand through franchising or company ownership. In this study, I re-examine franchising decisions using insights from institutional theory. The key tenet of institutional theory is that decisions are influenced by isomorphic pressures arising from the environment. Economic rationales such as the achievement of efficiency are thought of as less pervasive concerns. I begin by investigating whether institutional theory explains variance in franchising decisions beyond what is explained by agency theory. Then, I explore the extent to which institutional considerations moderate the relationships between agency considerations and franchising decisions. Hypotheses are tested on a unique database of 132 French franchise chains. Empirical results suggest that successful competitors' use of franchising explains variance in the focal chain's use of franchising beyond what is explained by the importance of local managerial inputs and the threat of franchisee opportunism. In addition, the threat of franchise opportunism is less strongly related to the focal chain's use of franchising when successful competitors have a high proportion of franchised outlets. Overall, findings from this study suggest that researchers should supplement agency theory with institutional theory to adequately explain franchising decisions.     

Creating opportunities for institutional entrepreneurship: The Colonel and the Cup in English County Cricket

This paper examines how actors within a mature cultural field use their field positions to create opportunities for institutional entrepreneurship. Our analysis of the product innovation of a Knock-Out Cup in English County Cricket between the 1930s and 1960s shows that when the economic viability of a mature cultural field is threatened, actors learn to recursively create market and political opportunities for institutional entrepreneurship by deploying the resources of their field positions in tactics targeted at shifting product category boundaries. We find that ‘lone hero’ institutional entrepreneurs who experience failure from working in relative isolation learn to acquire new resources and deploy them in new tactics leading to a more collective approach, which is necessary for disrupting the institutional gatekeeping work that maintains a mature cultural field.     

Measurement and structural invariance of entrepreneurial investment climate: A cross-country scale development

Testing invariance is important in cross-cultural studies because a lack of invariance may bias empirical results and lead to improper theoretical inferences. This study introduces and validates a scale for measuring entrepreneurial investment climate, consisting of four factors: Societal stability, Labor and Regulations, Quality of Infrastructure, and Ease of Finance. The instrument was developed using World Bank Group data from 51,169 firms and 72 institutional profiles to determine investment climate. Confirmatory factor analyses reveal the validity of the scale and its robustness across country types and time. The study’s implications for practice and future research are discussed.     

Can genetic factors influence the likelihood of engaging in entrepreneurial activity?

This article offers an argument for how genetic factors may influence the tendency of people to engage in entrepreneurial activity, and describes four mechanisms through which genetic factors could operate. It also explores ways that researchers can use quantitative and molecular genetics to examine entrepreneurship, and discusses the potential implications of a genetic perspective for management research on entrepreneurship.     

Engagement in entrepreneurship in emerging economies: Interactive effects of individual-level factors and institutional conditions

This paper examines individuals’ engagement in entrepreneurship in emerging economies. We conceive of such engagement as encompassing opportunity discovery, evaluation, and exploitation. We investigate the influence of individuals’ household income and level of education on their engagement in entrepreneurship, as well as the interaction effects between these individual-level factors and country-level regulatory, cognitive, and normative institutions. We test our hypotheses on a multi-source dataset from 22 emerging economies using a multilevel analysis technique. Our results indicate that the direct effect of individuals’ household income on their engagement in entrepreneurship is persistent, regardless of institutional conditions; but the influence of education level varies contingent upon various institutional conditions.     

Andrew Carnegie and the foundations of contemporary entrepreneurial philanthropy

This paper focuses upon the relationship between the business and philanthropic endeavours of world-making entrepreneurs; asking why, how and to what ends these individuals seek to extend their reach in society beyond business. It presents an original model of entrepreneurial philanthropy which demonstrates how investment in philanthropic projects can yield positive returns in cultural, social and symbolic capital, which in turn may lead to growth in economic capital. The model is applied to interpret and make sense of the career of Andrew Carnegie, whose story, far from reducing to one of making a fortune then giving it away, is revealed as more complex and more unified. His philanthropy raised his stock within the field of power, helping convert surplus funds into social networks, high social standing and intellectual currency, enabling him to engage in world making on a grand scale.     

Strategic and institutional effects on foreign IPO performance: Examining the impact of country of origin,corporate governance,and host country effects

Integrating signaling and institutional perspectives, we develop and test hypotheses relating institutions and corporate governance to foreign IPO success. Our investigation highlights the importance of three important drivers of foreign IPO success: home country legal institutions, corporate governance, and host capital market choice. This research demonstrates that board independence and country of origin effects are powerful signals. However, these factors do not have a universal impact on foreign IPO success. Instead, the value of home country institutions along with corporate governance signals are contingent upon the institutional environment in which international entrepreneurs choose to seek capital resources.     

The impact of formal and informal institutional distances on MNE corporate social performance

Can host country selection affect the corporate social performance (CSP) of multinational enterprises (MNEs)? Using institutional distance as our theoretical lens, we propose and empirically examine the notion that greater institutional diversity can have disparate influences on the social performance of different types of MNEs. We conceptualize each MNE as a unique portfolio of locations and use that “footprint” to examine the impact of formal and informal institutional distances on CSP. We hypothesize and find (1) a moderating influence of greater formal institutional distance in the MNE portfolio that slows the rate of increased benefits associated with greater international scope; and (2) a direct influence of greater informal institutional distance that lowers the overall levels of CSP independent of the international scope of the MNE. Managerial implications for international location selection are discussed.     

Exploring the relationship between institutional factors and FDI attractiveness: A meta-analytic review

This meta-analysis attempts to synthesize and review decades of research on the relationship between institutional factors and host country foreign direct investment (FDI) attractiveness. Using prior tests derived from 97 primary studies, we find support for prior theoretical predictions that institutional factors such as political stability, democracy, and rule of law attract FDI, while others such as corruption, tax rates and cultural distance deter it. Further evidence suggests a need for exploration of moderating factors that may influence previous key findings. Specifically, environmental effects such as level of development, region of destination, and competitive industry environment have varying influence on the strength and significance of the relationship. We also explore a number of methodological and economic moderating variables, providing additional interesting insights into previous empirical analyses. We conclude with suggestions for future research that stress a call for further contextualization of the relationship.     

Internationalization and breaking the glass ceiling: An institutional perspective

Gender diversity continues to serve as a thought-provoking and challenging topic for society and business alike. Even as organizations implement policies to minimize discriminatory practices in the workplace, evidence of gender inequality in firms around the world persists. Drawing on institutional theory, this study focuses on the effect that foreign investors and host country corporate social responsibility (CSR) policies have on gender diversity, and how professional groups can moderate this relationship. In analyzing 608 observations from listed firms in Taiwan, the findings demonstrate these relationships. It is shown that both foreign investor ownership and good host country CSR in firms are positively linked to the promotion of women into managerial positions. The assurance of professional groups in home countries further enhances this positive relationship. Our results further indicate how institutions carried across borders by organizations can influence firm decisions such as gender diversity through global norms of corporate CSR and also by the assurance of professional groups in the home multinational firm.     

Judging a business by its cover: An institutional perspective on new ventures and the business plan

Business plans are widely spread among new businesses, and they are supported by various universities, governmental assistance agencies, management consultants and a wide array of literature. Business plans are often taken for granted as highly useful tools that should be frequently updated and used. This study is based on data from six companies and their environments, over five years, using several forms of data collection such as interviews, observations, and archival data. In contrast to previous studies, we found that initial conformity to business plan norms gradually and without exception lead to loose coupling. Entrepreneurs who wrote business plans never updated or rarely referred to their plans after writing them.     

Institutional quality and inclusive strategies at the base of the pyramid

Social enterprises can profit by creating social value at the base of the pyramid (BOP), thereby simultaneously helping the poor and enhancing financial performance. We submit that social impact has a positive influence on financial performance and that this relationship is positively moderated by institutional quality. We make a distinction between local and international social enterprises and investigate if international social enterprises perform better than local social enterprises and how institutional quality moderates this relationship. We collected a unique dataset of social enterprises operating in BOP markets with a broad range of institutional qualities and find support for our hypotheses.     

A South-South perspective on emerging economy companies and institutional coevolution: An empirical study of Chinese multinationals in Africa

In this paper, we show how international tenders act as defining moments in building asymmetric coevolution-based mechanisms between Chinese multinational enterprises and local institutions in developing African countries. We used a case study methodology to explore how three Chinese multinationals – Citic, Sinopec, and Chinalco – developed non-market relations with the institutions of three African countries, namely, Algeria, Gabon and the Republic of Guinea, both during and after the submission of international tenders, to win strategic contracts and securely embed the company in question within the target host country. We found that Chinese companies not only submit tenders, but also develop multiple kinds of alliances in order to influence local institutions over the long term, transplant new business practices and standards, and expand in an unparalleled way, with host-country institutions and Chinese MNEs acting as partners in the new ecosystem. Based on our findings, we propose a model which highlights the specific mechanisms through which successful coevolution processes emerge and prosper between Chinese multinationals and developing country institutions. This study contributes to the international management literature by extending the field of institutional theory to co-evolutionism in international business.     

Subnational institutions,political capital,and the internationalization of entrepreneurial firms in emerging economies

This study advances the institution-based view of strategy by integrating it with firm-specific capability considerations. In particular, we investigate the integrative influence of subnational-level home country institutional environments and firm-level political capital, as an important way to seek resources, on emerging economy entrepreneurial firms’ internationalization. With data from Chinese entrepreneurial firms, we find that the development of subnational institutional environments in the home country is related to firms’ degree of internationalization. Furthermore, while political capital with low-level governments enhances the effect of subnational institutions on internationalization, political capital with high levels of government has no such moderation effect. Theoretical and empirical contributions and implications are discussed.     

A temporal analysis of how entrepreneurial goal intentions,positive fantasies,and action planning affect starting a new venture and when the effects wear off

The road from intentions to actions and new venture creation is long. So far, the literature has provided insights into action-regulatory factors that contribute to new venture creation. However, the literature has neglected to take into account the temporal dynamics underlying these relationships. We contribute to action-regulation theories in entrepreneurship by theorizing about and investigating how the effects of action-regulatory factors hold over time. We hypothesize that the action-regulatory factors of entrepreneurial goal intentions, positive fantasies, and action planning have combined effects on new venture creation. Furthermore, we hypothesize that these effects become weaker over time. To test our hypotheses, we studied 96 Ugandan entrepreneurs over 30 months. Our results supported our hypotheses. Action planning moderated the effects of entrepreneurial goal intentions and positive fantasies on new venture creation. Furthermore, the effects were significant in the beginning and wore off over time. Our study shows that including a time frame in theoretical models is important to derive valid conclusions from empirical results and to develop more precise theories.     

Bring institutions into FDI spillover research: Exploring the impact of ownership restructuring and institutional development in emerging economies

Extant studies exploring the influences of foreign direct investment (FDI) spillovers on the productivity of local firms have provided conflicting evidence. In particular, they have largely overlooked the important role of institutional mechanisms in the host market in understanding the sources of the variation in FDI spillover effects on the productivity of local firms, especially in the context of emerging markets. Using a comprehensive panel data set of manufacturing firms in China during 1998–2007, our paper presents an integrative framework of how FDI spillovers affect the productivity of local firms in emerging markets. We identify an inverted U-shaped relationship between FDI spillovers and the productivity of local firms in China. This result suggests the coexistence of and the interplay between the opposing mechanisms of FDI spillover learning opportunity and adverse competition. Drawing on the institution-based view, this study also develops contingency frameworks and arguments to explore the question of if FDI spillover effects are contingent on, or independent of, a local institutional context especially in emerging markets. We find that institutional mechanisms, such as the institutionally determined ownership restructuring and the different levels of subnational institutional development within the host emerging market, significantly shape the variation of FDI spillover effects on the productivity of local firms. This research highlights the importance of incorporating institutional effects in understanding the FDI spillover effects in emerging markets.     

Testing Baumol: Institutional quality and the productivity of entrepreneurship

Baumol's [Baumol, W.J., 1990. Entrepreneurship: productive, unproductive and destructive. Journal of Political Economy 98 (5), 893–921] theory of productive and unproductive entrepreneurship is a significant recent contribution to the economics of entrepreneurship literature. He hypothesizes that entrepreneurial individuals channel their effort in different directions depending on the quality of prevailing economic, political, and legal institutions. This institutional structure determines the relative reward to investing entrepreneurial energies into productive market activities versus unproductive political and legal activities (e.g., lobbying and lawsuits). Good institutions channel effort into productive entrepreneurship, sustaining higher rates of economic growth. I test and confirm Baumol's theory, and discuss its significance to the literature, economic prosperity, and policy reform.     

Emerging economies and institutional quality: Assessing the differential effects of institutional distances on ownership strategy

The current study contributes to the institution-based view of internationalization that is contingent upon the home country development. We examine the differential effects of formal and informal institutions on emerging market multinational corporations’ (EMNCs) ownership strategies. Facing a large informal institutional distance that represents diverse cultural beliefs, EMNCs opt for a low ownership position that alleviates legitimacy threat, whereas a large formal institutional distance leads EMNCs to establish dominant ownership control. EMNC home market conditions, including market size and regulatory institutional quality, further explain the differential effects of institutional distances.     

A comparative analysis of the entrepreneurial orientation/growth relationship in service firms and manufacturing firms

This article builds on the recently increasingly mentioned notion that entrepreneurship in the service sector is a worthwhile, but clearly underresearched topic. Using a sample of 1,612 small- and medium-size enterprises from the four German-speaking countries Germany, Austria, Switzerland, and Liechtenstein, and using structural equation modeling, this article finds that service firms have a significantly higher entrepreneurial orientation (EO) than manufacturing firms – both on the overall level as well as for each of the three sub-categories proactiveness, innovativeness, and risk-taking. With regards to the positive relationship between a firm's EO and its growth aspirations, nevertheless, no significant differences could be identified. Accordingly, this study shows that EO is a strategic orientation of highest value for service firms as well, under the premise of growth-orientation.