Handbook of Research on International Strategic Management
Show Less

Handbook of Research on International Strategic Management

Edited by Alain Verbeke and Hemant Merchant

The Handbook provides an impressive state-of-the-art overview of the international strategic management field as an area of scholarly inquiry. The great strength of the work is the thoughtfulness of the messages conveyed by the expert team of authors.
Buy Book in Print
Show Summary Details
You do not have access to this content

Chapter 17: Institutional distance and international strategy

Deeksha Singh and Ajai S. Gaur


Firms operating in international markets have to contend with a multitude of institutional environments. The institutional environment in a host market is often different from that in the home market of a firm. Understanding the differences between the home and the host country institutional environments and developing strategies to effectively manage the challenges arising due to these differences is the key to success in international business (IB) operations. Cross-national differences, in some form or the other, have been at the core of international business research. Hymer (1960/1976), in his early work on multinational corporations (MNCs), argued that firms face additional costs when operating in foreign countries. These costs of doing business abroad, which were later termed liability of foreignness (Miller and Parkhe, 2002; Zaheer, 1995; Zaheer and Mosakowski, 1997), depend on the extent of similarity/dissimilarity between the home country and the host country. The stages model of internationalization (Johanson and Vahlne, 1977) also suggests that firms gradually internationalize from low-distance countries to high-distance countries. Johanson and Vahlne (1977) suggested that distance arises due to differences in language, educational system, culture, business practices and economic development of countries. More recently, the eclectic framework of firm internationalization (Dunning, 1993) also argues for the importance of distance between the home and the host countries. Dunning (1993) takes a more holistic perspective on distance, arguing that countries differ not only in geographic distance, but also in social, cultural and political institutions.

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information

or login to access all content.