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The Relevance of the Institutional Underpinnings of Porter's Five Forces Framework to Emerging Economies: An Epistemological Analysis

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  • V. K. Narayanan
  • Liam Fahey

Abstract

ABSTRACT Using the Toulmin method, we present an epistemological analysis of Porter's Five Forces Framework (FFF) in light of the increasing evidence pertaining to the institutional context in emerging economies. The analysis reveals three key qualifiers in the theoretical structure of FFF – transaction costs, capital flows and laws governing rivalry. Evidence from emerging economies indicates that FFF's assumptions about the qualifiers are not met in these economies. Indeed, firms in these economies adopt strategies not derivable from FFF to tackle their unique institutional contexts. Our Toulmin analysis helps pinpoint the directions for further research in emerging economies. Specifically, the three qualifiers provide a meaningful way of building typologies and taxonomies to accommodate the diversity of institutional contexts and to link them to firm‐level strategies. Our discussion also highlights the need to turn the spotlight on laws governing rivalry, a relatively under‐explored topic in emerging economies, and the effectiveness of different network strategies.

Suggested Citation

  • V. K. Narayanan & Liam Fahey, 2005. "The Relevance of the Institutional Underpinnings of Porter's Five Forces Framework to Emerging Economies: An Epistemological Analysis," Journal of Management Studies, Wiley Blackwell, vol. 42(1), pages 207-223, January.
    • Handle: RePEc:bla:jomstd:v:42:y:2005:i:1:p:207-223
    DOI: 10.1111/j.1467-6486.2005.00494.x
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