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The effect of institutional isomorphic pressure on the internationalization of firms in an emerging economy: evidence from China

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  • Fangrong Li
  • Daniel Z. Ding

Abstract

This study uses institutional theory to explore the driving force for internationalization of firms in emerging economies. It posits that the internationalization practices of firms are driven not only by efficiency consideration, but also by the desire to conform to institutional isomorphic pressures exerted by the social environment. The impact of three types of institutional isomorphic pressures -- coercive pressure, mimetic pressure and normative pressure -- on the intensity of internationalization is investigated. Analysis using survey data collected from 174 Chinese firms shows that all three institutional pressures have positive and significant effects on the intensity of internationalization. We also examine the interaction between institutional pressure and firm capability. Results suggest that firm capabilities enhance the effect of coercive pressure on internationalization, and weaken the effect of normative pressure on internationalization.

Suggested Citation

  • Fangrong Li & Daniel Z. Ding, 2013. "The effect of institutional isomorphic pressure on the internationalization of firms in an emerging economy: evidence from China," Asia Pacific Business Review, Taylor & Francis Journals, vol. 19(4), pages 506-525, October.
    • Handle: RePEc:taf:apbizr:v:19:y:2013:i:4:p:506-525
    DOI: 10.1080/13602381.2013.807602
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    1. Hinrich Voss & Peter J. Buckley & Adam R. Cross, 2009. "An Assessment of the Effects of Institutional Change on Chinese Outward Direct Investment Activity," Palgrave Macmillan Books, in: Ilan Alon & Julian Chang & Marc Fetscherin & Christoph Lattemann & John R. McIntyre (ed.), China Rules, chapter 5, pages 135-165, Palgrave Macmillan.
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    Cited by:

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    3. Huang, Lei & Wang, Chenhao & Chin, Tachia & Huang, Jiahe & Cheng, Xuanmei, 2022. "Technological knowledge coupling and green innovation in manufacturing firms: Moderating roles of mimetic pressure and environmental identity," International Journal of Production Economics, Elsevier, vol. 248(C).
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    5. Qiuyang Gu & Chunhua Ju & Fuguang Bao, 2020. "The Cross-Border Mergers and Acquisitions of Local State-Owned Enterprises: The Role of Home Country Government Involvement," Sustainability, MDPI, vol. 12(7), pages 1-23, April.
    6. Dhir, Amandeep & Khan, Sher Jahan & Islam, Nazrul & Ractham, Peter & Meenakshi, N., 2023. "Drivers of sustainable business model innovations. An upper echelon theory perspective," Technological Forecasting and Social Change, Elsevier, vol. 191(C).
    7. Bhatnagar, Ankur, 2021. "What drives Indian Non-SOE FDI into Africa?," African Journal of Economic Review, African Journal of Economic Review, vol. 9(4), September.
    8. Yuan Jing, 2022. "The Relationship Between Business Model Innovation and Operational Performance of Incubator Enterprise," International Journal of Science and Business, IJSAB International, vol. 16(1), pages 153-191.
    9. Li, Jing & Xia, Jun & Shapiro, Daniel & Lin, Zhouyu, 2018. "Institutional compatibility and the internationalization of Chinese SOEs: The moderating role of home subnational institutions," Journal of World Business, Elsevier, vol. 53(5), pages 641-652.
    10. Dayuan Li & Min Huang & Shenggang Ren & Xiaohong Chen & Lutao Ning, 2018. "Environmental Legitimacy, Green Innovation, and Corporate Carbon Disclosure: Evidence from CDP China 100," Journal of Business Ethics, Springer, vol. 150(4), pages 1089-1104, July.
    11. Gupeng Zhang & Qianlong Zhang & Dujuan Huang, 2020. "Impact of Political Connection Strength on the Internationalization Outcome of Chinese Firms: Perspectives from Market Exploration and Technology Acquisition," Sustainability, MDPI, vol. 12(4), pages 1-17, February.
    12. Il Park, Byung & Xiao, Shufeng (Simon), 2021. "Doing good by combating bad in the digital world: Institutional pressures, anti-corruption practices, and competitive implications of MNE foreign subsidiaries," Journal of Business Research, Elsevier, vol. 137(C), pages 194-205.
    13. Yang, Yang & Jia, Fu & Chen, Lujie & Wang, Yichuan & Xiong, Yu, 2021. "Adoption timing of OHSAS 18001 and firm performance: An institutional theory perspective," International Journal of Production Economics, Elsevier, vol. 231(C).
    14. Kesen Zhang & Zhen Pan & Mukund Janardhanan, 2022. "Relationship between the Degree of Internationalization and Greenwashing of Environmental Responsibilities in China-Based on the Legitimacy Perspective," Sustainability, MDPI, vol. 14(5), pages 1-26, February.
    15. Jia Xu & Jiuchang Wei & Haipeng (Allan) Chen, 2019. "Strategic responses of stigmatized Chinese manufacturing firms to formal and informal environmental regulative pressures through enhanced corporate social responsibility effort," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 26(6), pages 1235-1260, November.
    16. Naoki Ando & Daniel Z. Ding, 2014. "An integrative institutional approach to MNC performance in China," Asia Pacific Business Review, Taylor & Francis Journals, vol. 20(4), pages 541-557, October.

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