How Do Institutions Matter for the Internationalization of Emerging Economy Firms? : Evidence from China

Research proposes that institutions matter in shaping firm strategic behavior as well as the performance implications of such behavior but is less forthcoming with respect to how they matter especially during the process of internationalization of emerging-economy firms. We build on the institution-based view to propose that emerging-economy firms often involves significant interplays with institutional rules as well as the changes of such rules when going international. We argue that the institutions in emerging economies play a central role in shaping the international expansion and the performance outcomes of such strategic behavior. In other words, institutions may shape and determine directly how emerging-economy firms formulate and implement strategies that create a competitive advantage. We test the proposed hypotheses using a comprehensive longitudinal data of internationalizing firms from China and offer important contributions and insights to better understand how institutions matter in explaining the internationalization strategy and performance of emerging-economy firms