The Impact of Relative Institutional Challenge on the Process of Firms’ Internationalization
Year: 2016
Type: dissertation
Abstract: In increasingly turbulent and competitive international environments, having a comprehensive and proper understanding of institutional environments at the country level is fundamental for success in international business. Many studies have examined how environmental and institutional factors affect the internationalization decisions of firms, and used different constructs for showing those institutional factors. \nThis dissertation demonstrates a comprehensive view of the challenge that firms perceive in countries’ institutional environment by developing a new construct called Relative Institutional Challenge and testing its effects on firms’ internationalization process. \nFor this purpose, this dissertation is structured in two main sections. In the first section, the construct of Relative Institutional Challenge was developed. Relative Institutional Challenge considers the effect of institutional differences between host and home countries (institutional distance), the state of institutionalization of the host country (institutional development) and rate of institutionalization of the host country (institutional uncertainty) simultaneously. Using extensive data from databases such as Global Competitiveness Report, Fragile States Index and Worldwide Governance Indicators, an index for measuring Relative Institutional Challenge was developed. \nIn the second part of this thesis, the effects of the Relative Institutional Challenge (RIC) on firms’ internationalization process were investigated. Three hypotheses were developed and validated. The hypotheses were demonstrating that the effect of the RIC, asthe independent variable on firms’ ownership structure and the variation of firms’ ownership percentage as the dependent variables. Empirical testing was performed based on an extensive dataset on international Joint Ventures (JVs) and acquisitions extracted from SDC Platinum dataset. The obtained results show the significant relationship between the level of institutional challenges that firms perceive, measured through the RIC Index, and the firms’ internationalization process, measured by firms’ ownership percentage and variance of ownership structure. Also, the moderating effect of firm size on this relationship was supported.
Author: Ehsan Derayati
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2563740319