Informal Institutions and International Busieness

Informal Institutions and International Busieness open_in_new

Special Issue Editors:

Deadline for submission: August 31, 2018

Tentative publication date:   Spring 2020

Introduction

This call invites papers focusing on the relationship between informal institutions and international business. In this special issue, we understand institutions to be “humanly devised constraints” or “the rules of the game in a society” (North, 1990: 3). Much attention has been paid to formal institutions, or the written (or codified) rules or constraints, such as laws, regulations, constitutions, contracts, property rights, and formal agreements. On the other hand, much less attention has been given to informal institutions or the typically unwritten but socially shared rules and constraints (Pejovich, 1999; Sartor & Beamish, 2014; Sauerwald & Peng, 2013). These informal institutions include common values, cognitions, beliefs, traditions, customs, sanctions, and norms of behavior that are often expected or taken for granted (North, 1990, 2005). In common parlance, the term ‘institutions’ is often used to refer to ‘organizations’ (e.g., governments, international organizations, non-governmental organizations, etc.), but it is important to distinguish between institutions and organizations for academic purposes in order to examine the relationship between them (Chacar, Celo, & Hesterly, 2017; North, 1990, 2005; Scott, 2013). For instance, the WTO is an organization that provides a formal institutional framework of written rules to which its member countries agree to adhere. Simultaneously, membership in the WTO creates informal (or unwritten) institutional structures between member nations, such as reciprocity and interdependency expectations. Papers examining the interaction of formal and informal institutions on international business are also welcome.

In the advent of globalization, the international business literature has increasingly emphasized the importance of considering the institutional environment, instead of studying firm behavior in a vacuum (Dau, 2012, 2013, 2017; Eden, 2010; Kostova, 1997, Kostova et al., 2008; Li, 2013; Li & Qian, 2013). Still, a gap exists in our understanding of informal institutions, as formal institutions only provide part of the picture (North, 1990). This gap is particularly problematic in developing and emerging markets, where informal institutions may have a more prominent role, enabling and facilitating business transactions (Khanna & Palepu, 1997, 2000; Verbeke & Kano, 2013).

Note that this special issue invites papers on informal institutions and not culture, although submissions may examine their relationship and tease out the differences between the two constructs as they relate to international business. Some prior work has treated culture and informal institutions as synonymous. However, these two terms are distinct albeit they can overlap at times. Definitions of culture vary in the literature, but it is typically defined as “the collective programming of the human mind that distinguishes the members of one human group from those of another. Culture in this sense is a system of collectively held values” (Hofstede, 1984: 51). It “is the deeper level of basic assumptions and beliefs” (Schein, 1985: 6-7; see also, Hofstede, 1980, 1994; House et al., 2004; Schein, 2004; Tung & Verbeke, 2010). Informal institutions, on the other hand, are the actual unwritten rules and norms of behavior (North, 1990, 2005), which likely arise as a result of and in conjunction with the cultural framework, but also of formal structures in place in a given location. For instance, whereas culture is often captured with broad dimensions such as the degree of uncertainty avoidance (Hofstede, 1980), embeddedness (Schwartz, 1992), or assertiveness (House, et al., 2004), informal institutions specifically refer to the shared unwritten rules or norms in a society, organization, or other social grouping.

Interdisciplinary Work and Work from Different Perspectives

Interdisciplinary work and research from different institutional perspectives is particularly welcome. Campbell (2004) has identified three main “institutional theories”: rational choice institutionalism (or institutional economics/comparative institutional analyses) (North, 1990; Williamson, 1975, 1985, 2000), organizational institutionalism (or neo-institutional theory) (DiMaggio & Powell, 1991; Scott, 1987, 2013), and historical institutionalism (or institutional sociology) (Granovetter, 1985, 1992, 2017). These theoretical strands are associated primarily with economics, political science, and sociology, respectively, but have been used across disciplines using other names as well (Campbell, 2004).

Submissions should make a clear and novel theoretical contribution, but may build on any theoretical lens (e.g., internalization theory, resource based view, transaction cost economics, evolutionary theory, learning theory, agency theory, etc.) in addition to the institutional theories (Cantwell et al., 2010; Dunning & Lundan, 2008, 2010). What is critical is to use the institutional framework to help develop new theoretical insights.

Furthermore, we encourage work that provides novel ways of measuring informal institutions.

Sample Topics

Given the limited attention on the effects of informal institutions on firms, as well as on the joint effects of formal and informal institutions on firms, this call for papers is purposefully broad. The following is not an exhaustive list, but provides some examples of potential topics:

  1. How do informal institutions, and their interactions with formal institutions, affect firms?
    • What is their impact on firm strategy across borders (e.g., internationalization decisions, location choices, mode of entry decisions, entrepreneurship, global corporate social responsibility, global innovation, etc.) (Dau & Cuervo-Cazurra, 2014; Pejovich, 1999)?
    • Are some of these institutions or combinations of institutions in different markets more conducive to firm success (Chacar, Newburry, & Vissa, 2010)?
    • How do firms organize internally to improve their institutional fit across countries? What structures and organizational models do they choose under different institutional conditions?
    • How do organizations learn the informal rules and develop international capabilities to manage them (Easterby-Smith & Lyles, 2011; Lyles, 2014)? How do resources and capabilities vary in these differing institutional contexts?
    • How does informal knowledge sharing or know-how sharing take place? How do inter- and intra-organizational learning systems and knowledge transfer relate to informal vis-à-vis formal institutional information and knowledge?
    • Do informal rules and governance choices allow unethical choices that are covered up? What happens if they are exposed?
    • What is the relationship between governance choices and the use of informal institutional structures, such as relational contracting based on favors, trust, reciprocity, interdependency, family ties, social capital networks, mutually beneficial relationships, interpersonal connections, and business group networks (Vissa, Greve, & Chen, 2010)? What is the specific role of informal structures such as Guanxi/Guanxiwang in China, Blats/Svyazy in Russia, Wasta in the Arab World, Immak in Korea, Kankei in Japan, Jeito/Jeitinho in Brazil, and ‘grease’ payments (Batjargal, 2007; Chen et al., 2004; Chua et al., 2009; Ledeneva, 1998; Millington et al., 2005; Opper et al., 2017; Park & Luo, 2001; Smith et al., 2012; Zhou et al., 2007)?
    • How do informal institutions alter the value distributions among stakeholders (Chacar & Hesterly, 2008; Coff, 1999; Lieberman & Chacar, 1997)?
    • How does the nature of competition and industry structure change with the informal institutional structure? Are foreign and local firms affected differently (Chacar & Vissa, 2005)?
  1. How do these institutions change and how do actors and organizations affect them (Vaccaro & Palazzo, 2015)?
    • How do firms engage in non-market strategies to affect informal and formal institutions and institutional structures/frameworks?
    • How do firms influence formal and informal institutions in different ways?
    • What is the impact of informal institutions on international organizations (e.g., international non-governmental organizations [INGOs], inter-governmental organizations [IGOs], international non-profit organizations [INPOs], etc.) and how do these organizations affect informal institutions?

Research Across Levels of Analysis

Although institutions are typically conceptualized at the national level of analysis, they may also be conceptualized at other levels, such as the supranational, regional, corporate, subsidiary, functional area, or workgroup/team levels of analysis. Papers focusing on informal institutions at different levels are also welcome. In particular, papers that study informal institutions across levels of analysis are particularly welcome. Some examples follow:

  • How are informal supranational institutions (i.e., hyper norms that cross borders) and formal supranational institutions (i.e., international laws, rules, regulations, and agreements) shaped by globalization and how does this affect international business?
  • How are supranational informal and formal institutions impacted by the diversity in informal and formal national environments and how does this complicate international business? Similarly, how can firms cope with or even benefit from such differences?
  • When do the informal and formal institutional frameworks of a firm clash and when are they compatible with the informal and formal institutional environments of their home and host countries of operation?
  • How can firms align informal and formal institutions across their international subsidiaries or across their areas of operation to enhance their international efficiency, growth, and performance?
  • How do business group informal institutional structures and networks operate and what are the implications for international business?
  • How do firms manage informal institutional differences across their international units (headquarters/subsidiaries), functional areas, or work groups?
  • Do MNEs provide a means of reducing informal and formal institutional differences across nations?

Conference and Symposium

With the aim of helping the authors further develop their papers, we will organize a paper development workshop conference during the spring of 2019. We will invite the authors of papers that receive the option to revise and resubmit their manuscripts. Together with the review process, the opportunity to present and receive comments from discussants and conference participants, will aid authors in strengthening and refining their papers.

Furthermore, we plan to have a symposium at a major academic conference in 2020 for the final selected papers that will appear in the special issue, in order to increase their visibility and impact.

Submission Process and Deadlines

Submissions need to meet JIBS guidelines, including in terms of what is considered international business. Typically, single country studies are only considered international if they focus on international firms or firm internationalization. Furthermore, submission should have implications for international business, although they may also have secondary implications for other fields.

All manuscripts will be reviewed as a cohort for this Special Issue.  Manuscripts must be submitted between August 17-31, at http://mc.manuscriptcentral.com/jibs. All submissions will go through the JIBS regular double-blind review process and follow the standard norms and processes.

For more information about this Call for Papers, please contact the Special Issue Editors or the JIBS Managing Editor (managing-editor@jibs.net).

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About the Guest Editors

Luis Alfonso Dau is an associate professor of International Business and Strategy at the D’Amore-McKim School of Business at Northeastern University. His research focuses on the strategic responses of emerging market firms to institutional processes and changes. He is particularly interested in the impact of regulatory reforms on the international strategy and performance of such firms.

Aya Chacar is an Professor in Management and International Business and Ingersoll-Rand Chaired Professor at Florida International University. She holds a PhD in Strategy and Organization from University of California, Los Angeles. Her research interests are on the interaction of institutions and globalization on firm organization and leadership, strategy and performance, strategic human assets and value appropriation.

Marjorie Lyles is Professor of International Strategic Management at Indiana University Kelley School of Business and the Kimball Faculty Fellow. She was founding Director of the Indiana University Center on Southeast Asia. She is a member of the American Management Association's International Council and has been an Invited Scholar and consultant for the U.S. Department of Commerce in the Peoples' Republic of China. Marjorie's writings center on organizational learning, international strategies and cooperative alliances, and technology development particularly in emerging economies. She is a Fellow of the Academy of International Business and a JIBS Area Editor.

Jiatao (JT) Li is Lee Quo Wei Professor of Business, Head and Chair Professor of Management, and the Senior Associate Dean of the HKUST Business School, Hong Kong University of Science and Technology. His current research interests are in the areas of organizational learning, strategic alliances, corporate governance, innovation, and entrepreneurship, with a focus on issues related to global firms and those from emerging economies.  His work has appeared in top academic journals such as Academy of Management Journal, Academy of Management Review, Journal of International Business Studies, Organization Science, and Strategic Management Journal. He is a Fellow of the Academy of International Business and a JIBS Area Editor.