Chapter 3: Towards an Institution-based View of Business Strategy in Asia
Mike W. Peng This chapter focuses on a key research question: why do strategies of ﬁrms from diﬀerent countries and regions diﬀer?1 This is the very ﬁrst question among the ﬁve most fundamental questions in strategic management raised by Rumelt et al. (1994: 564).2 Since the diversity of ﬁrm strategies around the world can arise as the result of many possible forces internal or external to the organization, this question engenders a wide variety of disparate answers from economists (Nelson, 1991) and sociologists (Carroll, 1993). Thus far, strategy researchers have primarily focused on industry conditions (Porter, 1980) and ﬁrm resources (Barney, 1991) as drivers of ﬁrm diﬀerences, leading to competitionand resource-based perspectives respectively. Drawing from recent research on Asian business organizations, I argue that, in addition to these existing theories, a new, institution-based view has emerged to account for diﬀerences in business strategy. A number of scholars have already suggested that, in addition to industry and ﬁrm-level conditions, a ﬁrm also needs to take into account wider inﬂuences from sources such as the state and society when crafting and implementing its strategies (DiMaggio and Powell, 1991; Oliver, 1997; see also Chapters 6 and 15 in this volume). These inﬂuences are broadly considered as institutional frameworks (North, 1990; Scott, 1995). When applied to strategy research, this new perspective can consequently be called an institution-based view of business strategy (Peng, 2000a, 2002, 2003, 2006; Peng and Heath, 1996). Since no ﬁrm can be immune...
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