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 2: International Business, Multinationals and National Business Systems

Glenn Morgan


Glenn Morgan 2.1 INTRODUCTION This chapter is concerned with the interaction between multinationals and national business systems. It draws on the extensive literature which has developed comparing different forms of capitalism (Whitley 1999, 2007; Hall and Soskice 2001). In relation to the study of multinational corporations (MNCs), this perspective provides one fundamental insight which in turn gives rise to two broad interconnected research streams. The fundamental insight is that firm organization, strategy and structure is shaped by the national institutional context in which the firm exists. When a firm internationalizes in the sense of locating offices, branches, subsidiaries, production facilities in other countries, it enters a new institutional context. Kostova describes this as a situation of institutional duality (Kostova 1999; see also Morgan and Kristensen 2006). The MNC subsidiary in the locality creates a co-presence of two institutional logics. The first is conformity to the rules of its home context; the second is conformity to the host context. This gives rise to the two research themes. The first is primarily concerned with the adaptations and learning which the multinational undergoes in a specific institutional context. Does it structure the subsidiary in accordance with its home-based practices or the practices of its host context? How does this affect the overall strategy and structure of the multinational? This is increasingly described in terms of the micro-politics of the MNC and its subsidiaries. The second considers more explicitly how the MNC relates to the host institutional context. In particular, how far does it...

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