Institutional Conditioning of Foreign Expansion: Some Evidence from Finnish‐Based Paper Industry Firms, 1994–2000

ABSTRACT Analyses of the foreign expansion of firms based on economics have recently been supplemented with institutionally‐oriented studies demonstrating that foreign expansion is partly conditioned by the institutional environment in which the expanding firms are embedded. In this paper, we join this emerging stream of research with an empirical study on three Finnish‐based paper industry firms from 1994 to 2000. By showing how changes in the patterns and forms of foreign expansion coincide with changes in the forms of corporate ownership and the cognitive constructions of organizational actors, our study confirms that foreign expansion cannot be adequately understood without reference to the institutional environment in which it originated. In particular, we show that foreign expansion can turn into an institutional requirement that directs the development of firms in part irrespective of the economic aspects involved.