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Institutional distance and local isomorphism strategy

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  • Robert Salomon

    (Stern School of Business, New York University, New York, USA)

  • Zheying Wu

    (Faculty of Economics and Business Administration, Tilburg University, The Netherlands)

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    Abstract

    Firms face disadvantages when operating abroad. To overcome these disadvantages, foreign firms often adopt mitigating strategies. One such strategy is to imitate the practices of domestic firms (i.e., pursuing a strategy of local isomorphism). We understand little, however, about how firms vary in the extent of local isomorphism. To fill that gap, this paper explores the institutional drivers of local isomorphism decisions. The findings indicate that foreign firms choose a higher level of local isomorphism as the cultural, economic, and regulatory distances between the home country and the host country increase. Moreover, the evidence suggests that such local isomorphism is relatively enduring, as experience does not systematically moderate the relationship between distance and local isomorphism.

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    Bibliographic Info

    Article provided by Palgrave Macmillan in its journal Journal of International Business Studies.

    Volume (Year): 43 (2012)
    Issue (Month): 4 (May)
    Pages: 343-367

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    Handle: RePEc:pal:jintbs:v:43:y:2012:i:4:p:343-367

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    Cited by:
    1. Kristin Hah & Susan Freeman, 2014. "Multinational Enterprise Subsidiaries and their CSR: A Conceptual Framework of the Management of CSR in Smaller Emerging Economies," Journal of Business Ethics, Springer, Springer, vol. 122(1), pages 125-136, June.
    2. Davide Castellani & Giulio Giangaspero & Antonello Zanfei, 2013. "Heterogeneity and distance. Some propositions on how differences across regions, firms and functions affect the role of distance in FDI location decisions," Working Papers, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini 1308, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2013.
    3. Cláudia Frias Pinto & Fernando Ribeiro Serra & Manuel Portugal Ferreira, 2014. "A bibliometric study on culture research in International Business," Working Papers, globADVANTAGE, Polytechnic Institute of Leiria 107, globADVANTAGE, Polytechnic Institute of Leiria.
    4. Aguilera-Caracuel, Javier & Hurtado-Torres, Nuria Esther & Aragón-Correa, Juan Alberto & Rugman, Alan M., 2013. "Differentiated effects of formal and informal institutional distance between countries on the environmental performance of multinational enterprises," Journal of Business Research, Elsevier, Elsevier, vol. 66(12), pages 2657-2665.
    5. Martin, Xavier, 2013. "Solving theoretical and empirical conundrums in international strategy research by matching foreign entry mode choices and performance," Open Access publications from Tilburg University, Tilburg University urn:nbn:nl:ui:12-5637252, Tilburg University.

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