The Role of Institutional Uncertainty for Social Sustainability of Companies and Supply Chains

Global sourcing largely occurs from so-called emerging markets and developing economies (EMDEs). In these contexts, substantial leverage effects for sustainability in supply chains (SCs) can be expected by reducing adverse impacts on society and minimising related risks. For this ethical end, an adequate understanding of the respective sourcing contexts is fundamental. This case study of South Africa’s (SA) mining sector uses institutional theory and the notion of institutional uncertainty to empirically analyse the challenges associated with establishing social sustainability. The case study research is informed by 39 semi-structured interviews with top management representatives and various state and non-state decision makers in SA. Our findings suggest that (social) sustainability in the institutional field is mainly shaped by the Social and Labour Plan institution, induced by state actors and mining companies’ practices. However, four weakening factors were identified that adversely affect this regulative institution, drive institutional uncertainty and allow for mining companies’ gradual decoupling. Contrastingly, complementing pressures of non-state actors limit institutional uncertainty and push toward mainstreaming the stipulations of the institution. This study contributes to the business ethics literature by providing an in-depth exploration of institutional uncertainty’s drivers and barriers within an upstream SC setting and shedding light on multiple actors’ interplay and relevance in sector-wide sustainability. The findings are condensed into three main propositions as well as an analytical framework as a basis for follow-up research. This case study helps practitioners understand and manage complexity that results from actor plurality and institutional uncertainty in EMDEs.

     

The effects of institutional development and national culture on cross-national differences in corporate reputation

Corporate reputation is becoming more important to managers and scholars around the world. However, little is known about how much or why reputation differs across countries. We use institutional theory to fill this gap. We focus on institutional development, reflecting the expansion of formal institutions, and national culture, an important informal institution. We find that reputation is negatively related to institutional development and masculinity and positively related to power distance in a sample of 401 corporations from 25 countries. We recommend that institutional theory complement signaling theory in cross-national studies of corporate reputation.     

The social construction of global corporate citizenship: Sustainability reports of automotive corporations

What does global corporate citizenship mean? In the absence of formal definitions, a place where understandings of corporate citizenship can be found is corporate texts. From the perspectives of sociological institutional theory and strategic legitimacy theory, we utilized critical discourse analysis as a methodology to study the corporate sustainability reports of multinational automotive corporations. We observed isomorphic themes that constitute socially constructed expectations of global corporate citizenship regarding climate change. We also observed heterogeneity in how these themes are manifested. We examined the rhetorical features of these reports as ways that corporations strategically position themselves in the global marketplace.     

Organizational coping with institutional upheaval in transition economies

The radical change in corporate governance systems is fundamental to the period of institutional upheaval characterizing transition economies. Using an institutional theory framework, this paper develops a model of responses to this change. The model is tested with data from 1,723 firms in 22 countries in Central and Eastern Europe and the Newly Independent States. The results suggest that a firm’s adaptation to the new governance order will be facilitated or hampered depending on the characteristics of the institutional and organizational contexts it faces. A major implication of the study is the need to consider cultural and contextual embeddedness in explaining how governance systems transform.     

On religion as an institution in international business: Executives’ lived experience in four African countries

We use institutional theory to understand how managers in different types of firms make sense of the dysfunction of institutionally weak environments. We interviewed ninety executives working in Botswana, Kenya, Nigeria and Zimbabwe, and found that religion was used as a normative institution when dealing with remediable institutional dysfunction, typically corruption, and as cultural-cognitive institution when dysfunction was perceived as non-remediable (associated with pervasive uncertainty) for those working for domestic firms and so-called nascent multinationals. No executives working for developed country (European) multinationals used religion as a system of meaning-making; executives of emerging market (South-African) multinationals used religion only normatively.     

How much of a socialist legacy? The re-emergence of entrepreneurship in the East German transformation to a market economy

We investigate how institutional change—the transition from a socialist system to a western type market economy—relates to the re-emergence of entrepreneurship in East Germany. This region is particularly well suited for such a study because of the rapid change of the institutional framework and the possibility to use West Germany as a benchmark. It took about 15 years until self-employment levels in East Germany reached those of West Germany. Despite this catch up, we find a number of peculiarities in East German self-employment that appear to be a continuing legacy of the socialist period. There is also a considerable correspondence of the regional levels of self-employment before, during and after the socialist period, suggesting the existence of a long-lasting regional entrepreneurship culture that can be regarded as an informal institution. This is in line with the hypothesis that informal institutions change much more slowly than formal institutions.     

Circles within a Circle: The Condition for the Possibility of Ethical Business Institutions Within a Market System

How can a business institution function as an ethical institution within a wider system if the context of the wider system is inherently unethical? If the primary goal of an institution, no matter how ethical it sets out to be, is to function successfully within a market system, how can it reconcile making a profit and keeping its ethical goals intact? While it has been argued that some ethical businesses do exist, e.g., Johnson and Johnson, the argument I would like to put forth is that no matter how ethical a business institution is, or how ethical its goals are, its capacity to act in an ethical manner is restricted by the wider system in which it must operate, the market system. Unless there is a fundamental change in the notion of the market system itself, the capacity for individual businesses to act in an ethical manner will always be restricted. My argument is divided into two parts. The first part is to show the inherent bias towards unethical outcomes that is inherent in the market system. The second part is to suggest how to reorient the general economic framework in order to make ethical institutions more possible. The question then becomes, how to define economic behavior in terms other than competition for profit.     

Coercive,normative and mimetic isomorphism as determinants of the voluntary assurance of sustainability reports

This study offers an opportunity to understand how country- and industry-specific effects may affect the decision to assure sustainability reports by identifying institutional pressures. Based on neo-institutional theory, the aim of this research is to highlight whether assurance derives from the coercive, normative and mimetic forces related to legal and cultural strength and the industry pressure for assurance, respectively. The panel data analysis of an international sample of 696 companies for the period 2007–2014 shows that voluntary assurance acts as a legitimization tool implemented by companies in response to normative, coercive and mimetic pressures; that is, companies operating in countries that have a greater legal system and cultural development, especially in industries that are greatly concerned about sustainability, are more likely to issue an assurance statement. Moreover, through a two-stage logit model, we respond to the question of which is the relevant institutional factor that causes voluntary assurance to be adopted. Specifically, we evidence that the normative factor is the one that exerts the greatest explanatory power in the assurance demand, followed by coercive pressure.     

Teaching International Business Abroad: Paradigms Suggested by Metaphor Theory

When International Business (IB) is taught abroad, the educational institution has to decide on organizational issues and educational and teaching paradigms. College and university programs abroad can adopt organizational values and identities similar to the home institution, or adapt to local operating environments. Likewise, educational and pedagogic paradigms can mirror those in the home institution or expand to realize and consider local contexts. Based on a consideration of metaphor theory, it is suggested that there are three ways of dealing with international educational experiences. The non‐metaphoric paradigm fails to recognize and engage with ambient difference. The comparison paradigm compares and contrasts acquired institutional understandings with local realities. The domains‐interactive seeks to stimulate a dynamic exploration of home and local assumptions, looking for new emergent themes and understanding. Insight derived from metaphor theory not only suggests how these different paradigms emerge but potentially provides vibrancy and pervasive urgency to conducting IB education abroad.     

Fuzzy Bargaining Games: Conditions of Agreement,Satisfaction, and Equilibrium

Game theory in its several variants is widely recognized as a contribution to social and economic modeling. One relevant development of classical game theory, Generalized Game Theory (GGT), entails its extension and generalization through the formulation of the mathematical theory of rules and rule complexes. Social theory concepts such as norm, value, belief, role, social relationship, and institution as well as game can be defined in a uniform way in terms of rules and rule complexes. Among the applications, one major initiative has been the conceptualization of fuzzy games and equilibria. In this paper a GGT model of 2-person fuzzy bargaining games is outlined. Two key concepts are applied: (1) players’ value (or “utility”) structures consisting of ideal points or expectation levels, on the one hand, and limits of acceptance, on the other; (2) fuzzy judgment functions in which players deal with imprecise information and use approximate reasoning in making decisions and negotiating agreements. Such fuzzy judgment functions can take into account economic, socio-psychological, and cultural and institutional aspects of the bargaining context, which affect the bargaining process in specifiable ways. Several significant results are obtained from the application of this model: the opportunities (or not) for agreement, the participants’ satisfaction levels with an agreement, and the question whether or not the agreed “price” is an equilibrium price.     

Institutional Interest in Corporate Responsibility: Portfolio Evidence and Ethical Explanation

This study examines the extent to which corporate responsibility influences the demand for shares by institutions. The study follows Bushee (Account Rev 73(3):305–333, 1998) in categorising institutions as dedicated or transient. The demand for shares is organised according to three factors: a long-term factor, corporate responsibility; a short-term factor, market liquidity; and a time-independent factor, portfolio theory. The rank and importance of the factors for the different types of institutional investor are analysed. For one of two types of dedicated institution, corporate responsibility is as important as portfolio theory in influencing the demand for shares. For all dedicated institutions, corporate responsibility influences the demand for shares more than market liquidity. For two of the three types of transient institution, market liquidity is the most important factor in share selection. For all transient institutions, the least important factor is corporate responsibility. Findings suggest that corporate responsibility positively and significantly influences the demand for shares by dedicated institutions. The discussion considers the extent to which these trends are constitutive of significant shifts in ethicality within the context of institutional investment. Looking at this from within a highly institutionalised Anglo market model, dedicated institutions’ commitment to broader and longer-term concerns could be interpreted as a small but significant step towards a more axiologically informed ethical business practice. Such a form of engagement calls for sensitive attention to a fuller range of features deemed to be relevant to investment decisions, as opposed to more narrow reliance on legislation, codes of practice and fiduciary principles.     

Economic nationalism and foreign acquisition completion: The case of China

Extending institutional theory, we incorporate a neglected but important component of formal institution, economic nationalism, into a model that specifies its effects on cross-border acquisition success. We suggest that economic nationalism has a dynamic nature and sees the interaction between protectionism and liberalism. As such, it exerts both positive and negative effects on foreign investments, contingent on how these investments are perceived as aligned with the national interests as reflected by national security considerations, foreign relations, and growth strategy. Using a data set containing 7275 announced cross-border acquisition deals in China during 1985–2010, the study finds that (1) when an acquisition activity targets essential industries or state-owned enterprises, it is less likely to be completed because of provoked national economic security concerns; and (2) when an acquirer brings technology and/or capital, or/and helps to restructure poorly-performing firms, or/and the acquirer comes from a country with good foreign relations with China, the acquisition is considered as safe and helpful for the country's development, and it is more likely to be completed.     

Do the Right Thing: The Imprinting of Deonance at the Upper Echelons

This study expands the application of deonance theory into organizations’ upper echelons by examining how CEOs imprinted with a sense of duty can influence managerial decision-making. We hypothesize an imprint of bounded autonomy, an ought-force that constrains their decision-making and understanding of behavioral freedom, influences duty-bound CEOs to self-report errors in past financial reporting. We test deonance theory propositions of instrumentality for behavioral expansion, namely loss avoidance and gain attainment, related to institutional ownership concentration and CEO equity ownership. We use CEOs that are graduates of U.S. service academies as a proxy for duty-bound executives and find firms they lead are more likely to issue a financial restatement to correct a previous reporting error. This finding is robust to alternate explanations such as being error-prone, earnings management, auditor oversight, and risk behaviors. We also find evidence that deonance may be subject to behavioral expansion. The likelihood of issuing a restatement decreases as institutional ownership concentration and CEO equity ownership increases. This study shows imprinted deonance within the C-suite influences important organizational outcomes.

     

Interaction effects of globalization and institutional forces on international HRM practice: Illuminating the convergence‐divergence debate

In the face of globalization, scholars continue to debate about whether a convergence in human resources practices will prevail, or a trend of divergence perspective will persist. Building on institution theory, this article helps to explicate this debate by examining how globalization may interact with different dimensions of local institutional forces to lead to convergence, divergence, or crossvergence in international HRM practices for enhanced performance. We also present useful propositions for guiding future empirical research and theory development on the interaction between globalization and different forms of local institutional forces, which in turn influence the formation of successful international HRM practices. © 2011 Wiley Periodicals, Inc.     

基于制度理论的中国B2B发展关键障碍因素探索

中国B2B发展的障碍不乏有人探讨,但是以前的研究者将不同模式的B2B当成一个整体,且论述缺乏理论依据。本文试图从制度和企业吸收能力的角度,构筑一个整合的理论框架来探讨不同的B2B制度模式的发展障碍。从制度的层面,我们说明了制度环境因素和旧有的制度对积聚型B2B模式的发展造成了障碍,尤其是当B2B运营者希图提供全程交易时。对于供应链型B2B,我们提出,由于新的B2B制度还处于萌芽期,企业B2B吸收能力是其发展的重要制约因素。同时,旧有的制度通过制约企业对B2B的吸收能力,间接制约供应链B2B模式的出现。     

From Voids to Sophistication: Institutional Environment and MNC CSR Crisis in Emerging Markets

Why do multinational corporations (MNCs) frequently encounter corporate social responsibility (CSR) crises in leading emerging markets in the new century? Existing research about institutional impacts on MNC CSR has developed a void-based account about how the flawed institutional system allows misdeeds to happen. But the fact that such misdeeds have turned into increasing CSR crises in the new century along with institutional change is rarely taken into account. This paper combines studies of institutional voids, institutional entrepreneurship, and stakeholder theory to develop a concept of institutional sophistication, which refers to both the top-down maturation of the regulatory system that standardizes firm behavior and the bottom-up diversification and intensification of grassroots initiatives that redefine stakeholder membership. Based on this concept, we developed a framework to comprehensively demonstrate how both institutional voids and sophistication drive the MNC CSR crisis in leading emerging markets. Empirically, we established an original database that includes 309 publicized CSR crises encountered by major foreign MNCs in China, India, and Russia, 2000–2011. Through a content analysis, the paper reveals six common sophistication processes that drive the MNC crisis across contexts and also specifies stakeholder strategies that make these processes happen and vary by social problems and national contexts. We also discussed the value of studying corporate social irresponsible behavior in understanding the institution–MNC relationship.     

The interplay between home and host country institutions in an emerging market context: Private equity in Latin America

This study examines how the interplay between home and host country regulatory institutions affects the investment strategy of private equity (PE) firms in an emerging market context. To answer this question, we consider three different mechanisms: (1) the institutional hazard avoidance effect, (2) the institutional escapism effect, and (3) the dysfunctional institutions effect. Contrary to conventional wisdom, we argue that regulatory institutional differences between home and host countries can sometimes have a positive rather than a negative effect on investment likelihood. Our findings show that when a host emerging market has a strong regulatory institutional system relative to other emerging markets, it is more likely that this country will attract PE investments from firms based in home countries with very strong and very weak institutional systems. The empirical analyses, based on a polynomial specification and a dataset covering more than 300 PE firms that made close to 1500 investment transactions in Latin America during 1996–2011, are consistent with our main theoretical arguments.     

Toward a More Coherent Understanding of the Organization–Society Relationship: A Theoretical Consideration for Social and Environmental Accounting Research

In this study we analyze the overlapping perspectives of legitimacy theory, institutional theory, resource dependence theory, and stakeholder theory. Our purpose is to explore how these theories can inform and be built upon by one another. Through our analysis we provide a broader theoretical understanding of these theories that may support and promote social and environmental accounting research. This article starts with a detailed analysis of legitimacy theory by bringing some recent critical discussions on legitimacy and corporations in the management literature into accounting research. The notion forwarded by legitimacy theory then serves as an overarching concept to examine the relationship between and among theories. We conclude that two theoretical considerations are important for future social and environmental accounting research. First, it must be acknowledged that some business entities initiate social activities based on direct interactions with stakeholders, whereas others may also undertake similar activities to manage their societal level of legitimacy. Second, from analyzing the perspectives of legitimacy theory, institutional theory, resource dependence theory, and stakeholder theory, it is possible to reach compatible interpretations of business social phenomena, and the selection and application of these theories should depend upon the focus of study.     

With great power comes great responsibilities – Examining platform-based mechanisms and institutional trust in rideshare services

From the perspective of female passengers, much remains unknown about institutional or platform trust and the sharing economy. The present study was conducted in an emerging economy context to comprehend the significance of institutional trust. The study aimed to develop a dynamic theoretical model incorporating the perceived effectiveness of platform-based institutional structures (PEPIS) as a dependent variable in sharing economy platforms, examine the antecedents of PEPIS and determine how PEPIS affects female passengers' trust in the institution or platform. Different strata of female passengers were targeted using a quota-cum-purposive sampling method. In total, 413 useable responses to a pre-tested survey questionnaire were collected. Our findings contribute to the literature on institutional structures and trust by demonstrating that four market-driven institutional mechanisms directly and significantly influence PEPIS: perceived effectiveness of feedback mechanism, perceived effectiveness of escrow services, perceived effectiveness of provider certification and perceived effectiveness of urgent rescue; PEPIS is directly related to perceived trust in the platform (TRST); the relationships between TRST and the study's outcome variables (subjective well-being, intention to recommend, and continuous usage intention) were also tested and found significant. It was also found that TRST promotes female users' continuous usage intention, intention to recommend and subjective well-being.     

现代经济增长的综合分析框架:分工—制度—品牌模型

分工带来专业化程度的提高和生产迂回程度的增加,促进了经济增长,但同时也带来了交易费用的上升,因此制度变迁理论认为,制度安排通过降低交易费用、提高经济组织的效率从而促进经济增长。分工带来的产量增加和产品多样化却会导致消费者的选择成本上升、降低消费者的选择效率从而降低资源配置效率,使生产和消费不能保持均衡发展,妨碍了经济增长。而品牌和品牌品类化则是产品多样化时代能有效降低消费者选择成本的工具和手段。因此分工及专业化与制度及其变迁从生产或供给角度解释了生产效率对经济增长的决定作用,而品牌从需求方面解释了消费者的选择效率对经济增长的促进和拉动作用,分工—制度—品牌模型可以成为当代解释经济增长的综合分析框架。