Handbook of Institutional Approaches to International Business
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Handbook of Institutional Approaches to International Business

Edited by Geoffrey Wood and Mehmet Demirbag

Expertly written by leading scholars from a range of different starting points, this compendium presents a synthesis of recent work relating to institutionally-informed accounts from transitional and emerging markets, as well as from mature economies. It specifically focuses on the linkage between institutions and what goes on inside firms, and the relationship between setting, strategic choice and systemic outcomes.
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Chapter 1: Institutions and Comparative Business Studies: Supranational and National Regulation

Geoffrey Wood and Mehmet Demirbag


Geoffrey Wood and Mehmet Demirbag 1.1 INTRODUCTION Through the 2000s, institutional approaches have been particularly influential amongst comparative studies of business. What institutional approaches suggest is that embedded social structures and rules mould and are remoulded by the choices made by firms. In practice, this means that within specific national contexts, there will emerge a dominant way of doing things, which may have the beneficial effects of imparting predictability and lowering transaction costs. Critics have charged that this emphasis on the national has in many respects led to a discounting of regional and sectoral differences, and indeed, supranational trends and pressures. In the international domain, there are three possible critiques. The first centres on a discounting of the effects of supranational institutions; the second on a neglect of the role of multinational or transnational companies; and the third on an overattention to comparison and insufficient attention to the wider nature of capitalism itself. 1.2 SUPRANATIONAL INSTITUTIONS AND NATIONAL INSTITUTIONAL FRAMEWORKS 1.2.1 Supranational Institutions: The Limits of Europeanization As Boyer and Hollingsworth (1997) note, institutions are nested within each other. Whilst a single institutional level – most commonly the national – may have particularly strong effects, the impact of other levels of institutional concentration at both the subnational and supranational  levels should not be neglected. In practical terms, there are two major sets of supranational institutions that may affect what nations and firms do. The first are regional coordinative and cooperative bodies such as the European Union; whilst the second include bodies with...

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