We explore each of these aspects below, as well other potential areas for future research. Powell, W. W., & DiMaggio, P. J. (Eds.). Success of the transnational transfer of organizational practices within multinational companies. The rise of neoliberalism and institutional analysis. Asia Pacific Journal of Management, 30(3): 853870. Indeed, even within work on culture, there are two main traditions, each with distinct logics. Meyer, J., Scott, R., Zucker, L., DiMaggio, P., & Powell, W. 2005. What are institutions? Granovetter, M. 1985. Do country-level institutional frameworks and interfirm governance arrangements substitute or complement in international business relationships? American Journal of Sociology, 83(2): 340363. Institutions rule societal issues in the areas of politics (e.g., corruption, transparency), law (e.g., economic liberalization, regulatory regime), and society (e.g., ethical norms, attitudes toward entrepreneurship). Sustainable competitive advantage: Combining institutional and resource-based views. Our analysis is based on the Helmke and Levitsky framework of informal institutions and . Pro-market reforms and developing country multinational corporations. A full development of course would require a much longer treatment, so here we simply provide some suggestions for how this conversation could move forward. Journal of International Business Studies, 39: 920936. A third article from the SI, entitled Navigating informal institutions in emerging markets: Entrepreneurs political participation, self-perceived status, and new venture internationalization and authored by Li, Wei, Cao, and Chen, also extends this stream by studying Guanxi as an informal institutional structure in the context of the effects of political participation of entrepreneurs on internationalization in China. Chacar, A. S., Celo, S., & Hesterly, W. 2018. Oxford: Oxford University Press. Varieties of capitalism: The institutional foundations of comparative advantage. Sewell, W. 1999. Perspectives on Politics, 2(4): 725740. El objetivo es estimular la conversacin acadmica sobre el tema, mostrando cmo las instituciones informales son esenciales en el estudio de los negocios internacionales. Profiting from globalization: Pro-market reforms, firm internationalization strategy, and firm profitability. Addressing the cross-boundary missing link between corporate political activities and firm competencies: The mediating role of institutional capital. The social construction of organizational knowledge: A study of the uses of coercive, mimetic, and normative isomorphism. True. In particular, it examines how the social and economic disruptions caused by Chinas Cultural Revolution during the countrys Treaty Ports Era (which spanned from 1842 to 1943) led to what were formal institutions transforming into informal institutions that have endured to this day. Jiang, G. F., Holburn, G. L., & Beamish, P. W. 2014. While the formal rules and their enforcement characteristics are partially possible to quantify and measure, informal constraints, or informal institutions, pose a much larger problem in that sense for researchers. In conclusion, the topic of informal institutions and IB is very important and understudied, providing a meaningful avenue for rich future work in our field. 2014. Examples of these include Guanxi/Guanxiwang in China, Blats/Svyazy in Russia, Wasta in the Arab World, Yongo in Korea, Kankei in Japan, Jeito/Jeitinho in Brazil, and grease payments (Batjargal, 2007; Chen, Chen, & Xin, 2004; Chua, Morris, & Ingram, 2009; Ledeneva, 1998; Millington, Eberhardt, & Wilkinson, 2005; Opper, Nee, & Holm, 2017; Park & Luo, 2001; Smith, Torres, Leong, Budhwar, Achoui, & Lebedeva, 2012; Zhou, Wu, & Luo, 2007). These include formal and informal rules and compliance procedures (Granovetter, 1985; Thelen & Steinmo, 1992), giving informal institutions an explicit role and making this classification also compatible with that of RCI (North, 1990, 2005; Williamson, 1985, 2000). Rational choice institutionalism (RCI) emerged from the field of economics in the 1970s. DiMaggio, P. 1997. Furthermore, it also embraces the logic of the process of diffusion (Djelic, 1998; Duina, 1999). Hitt, M. A., Li, D., & Xu, K. 2016. International strategy: From local to global and beyond. Hitt et al., (2016: 60) refer to informal institutions (e.g., culture). Institutions and social conflict. 2023 Springer Nature Switzerland AG. We would thus encourage authors doing this type of work to explicitly connect it with informal institutions, to help advance this body of work in a more cohesive manner. Jindal Global University. We propose ways to address this issue in the Reconciliation Efforts section below. These are the values-based framework (e.g., Bond, 1987, 1988; Hofstede, 1980, 2001; House, 1998; House et al., 2004; Realo, Allik, & Vadi, 1997, 2002; Rokeach, 1973; Schwartz, 1992, 1994; Triandis, Bontempo, Villareal, Asai, & Lucca, 1988) and the cognitions-based framework (e.g., Casson, 1983; DiMaggio, 1997; Lehman, Chiu, & Schaller, 2004; Markus & Kitayama, 1991; Markus, Kitayama, & Heiman, 1996; Miller, 1997; Sewell, 1992, 1999; Sperber & Hirschfeld, 1999; Swidler, 1986). Luego, revisa la bibliografa sobre las tres principales tradiciones institucionales, explicando para cada una de ellas el rol de las instituciones informales y relacionndolas con la literatura de negocios internacionales y los artculos del nmero especial. Both can be equally important in structuring the 'rules of the game', as long as they appear legitimate. American Journal of Sociology, 101(4): 9931027. Dau, L.A. 2010. An important area for future research is to develop additional measures and indices of informal institutions that are squarely built on an institutional framework. The newer version was developed through the work of scholars such as Polanyi (1957), Granovetter (1985), Block (1994), Hall and Soskice (2001), Fukuyama (2004), and others (Steinmo, 2001). This article reviews the basic values of procedural systems in both formal contexts (trials, courts and related institutions;, contrasts these to the different values expressed in . They include tax laws, legal regulations, political freedoms, ethno-linguistic fractionalisation, religion, and infrastructure. 2016. Clemens, E. S., & Cook, J. M. 1999. In breaking established rules, actors can disrupt the institutional system, which can lead to social uproar and backlash, but it can also lead to institutional change and institutional innovations. As we discussed, each of the frameworks has strengths and weaknesses, often based on their disciplinary backgrounds, training, and focus. Zhou, K. Z., & Poppo, L. 2010. Most of these have received limited attention in the IB literature and would be worthy of further study. Towards a renaissance in international business research? One of the articles from the SI, entitled Bringing informal institutions into absorptive capacity research: A cross-country meta-analytic study, by Yao, Jiang, Combs, and Chang, connects informal institutions with absorptive capacity research using a meta-analysis methodology. Aguilera, R. V., & Grgaard, B. Journal of International Business Studies, 51(4): 467497. Por ltimo, identifica reas que han recibido poca An evolutionary approach to understanding international business activity: The co-evolution of MNEs and the institutional environment. Eden, L. 2010. Katznelson, I., & Weingast, B. R. 2005. By this we mean that either theoretically the two terms are used interchangeably, which measures of culture are used to capture informal institutions, or both (see footnote for specific examples).4 Furthermore, the main measures of culture used in this literature (e.g., Hofstede, 1980, 2001; House, 1998; Schwartz, 1992) are based on values and do not capture shared rules, such as norms, customs, and traditions. Informal institutions and international business: Toward an integrative research agenda, Journal of International Business Studies, https://doi.org/10.1057/s41267-022-00527-5. Vaccaro, A., & Palazzo, G. 2015. We discuss a possible way to address these issues in the Reconciliation Efforts section below. Informal institutions serve as the invisible threads that connect the fabric of social groupings, making them a critical element in the study of IB, but also especially challenging to capture both theoretically and empirically. American Sociological Review, 48: 147160. 2019. Culture in this sense is a system of collectively held values (Hofstede, 1984: 51). Journal of International Business Studies, 41(2): 223245. An informal organization often serves individual needs where members can create purpose as the organization evolves. Understanding how IB influences institutional change and vice-versa can also be a rich area for additional research. It is thus not surprising that six of the ten SI papers most closely connect with this tradition. shared informal institutions, such as migrant networks, for international trade. A key aspect of HI is that it considers both a logic of instrumentality and a logic of appropriateness as key incentives for action. Journal of International Business Studies, 41 (8) (2010 . Universals in the content and structure of values: Theoretical advances and empirical tests in 20 countries. Langlois, R. J Int Bus Stud 53, 9851010 (2022). On the other hand, much less attention has been given to informal institutions, which are defined as the typically unwritten but socially shared rules and constraints that generate social behavior expectations. Similarly, in including formal and informal institutions in the regulatory pillar, the distinction between them is not highlighted. Strategic Management Journal, 18(9): 697713. Shleifer, A., & Vishny, R. W. 1998. The way that actors behave based on those informal institutions is often visible, but the unwritten rules that lead to those behaviors are invisible. Therefore, an interdisciplinary, inter-framework conversation could bear fruit as a means of learning from each other and examining the same issues from vastly different points of view. There are typically also more evident repercussions of failing to follow such constraints, which may or may not be fully enforced in different societies, making them more salient for social actors. In K. Polanyi, C. M. Arensberg, & H. W. Pearson (Eds. Second, formal rules may range from being effective to ineffective, and the role that informal institutions take in each case will also be different. . 2013. Beverly Hills: Sage. March, J. G., & Olsen, J. P. 1989. Rules developed to govern human behaviour. A review of the nonmarket strategy literature: Toward a multi-theoretical integration. Organizational culture and leadership (1st ed.). It also reviews the IB literature on informal institutions for each tradition, including the papers in the SI. Principal-principal conflicts under weak institutions: A study of corporate takeovers in China. They can also exist at the department level within a company. Princeton: Princeton University. These are coercive, mimetic, and normative isomorphism (DiMaggio & Powell, 1983; Mizruchi & Fein, 1999). Academy of Management Journal, 45(1): 215233. Princeton: Princeton University Press. In addition, it would be beneficial to have additional work on how informal institutions can influence international firm strategy (Dau, 2010, 2015, 2016). Institutions, institutional effects, and institutionalism. Its disciplinary origins can be traced back to the old institutional economics and neoclassical economics of the early 20th century, as it draws its foundational ideas from both (Campbell, 2004; Hodgson, 1998, 2006; Rutherford, 1996). Baltimore: Johns Hopkins Press. We propose that IB can be an ideal field for developing theory on informal institutions that can deeply influence not just our field, but other fields as well. Evolution refers to the case where institutions evolve slowly and gradually over time. For instance, whereas culture is often captured with broad values-based 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 norms or social expectations in a society, organization, or other social groupings. 1993. Similarly, future work can examine how firms develop internal capabilities and organizational learning (Crossan, Lane, & White, 1999) to better cope with informal institutional processes (Easterby-Smith & Lyles, 2011; Lyles, 2014) and multiple institutional logics (Besharov & Smith, 2014; Zhou, Gao, & Zhao, 2017). Theoretical issues in cultural psychology. March, J. G., & Olsen, J. P. 2004. The roots of this perspective can be traced back to an older version of the institutional perspective dating back to at least the early 20th century and the work of Weber, Marx, and others. Definitions of culture vary in the literature, but it is often defined as a broader term in IB that captures the collective programming of the human mind that distinguishes the members of one human group from those of another. The new comparative economics. ), Social psychology: Handbook of basic principles: 857913. We discuss this further in the Reconciliation Efforts section below. Another relevant area of research is that of non-market strategy (Baron, 1995), which refers to a firms concerted pattern of actions to improve its performance by managing the institutional or societal context of economic competition (Mellahi, Frynas, Sun, & Siegel, 2015: 143). Realo, A., Koido, K., Ceulemans, E., & Allik, J. Stephan, U., Uhlaner, L. M., & Stride, C. 2015. Scott, W. R. 2013. Finally, it identifies gaps and proposes a future research agenda. Comparing capitalisms: Understanding institutional diversity and its implications for international business. Mimetic occurs due to uncertainty. (Eds.). Journal of International Business Studies, 45(9): 10721095. We thus propose that much of this valuable research would be better classified as being part of the IB literature on culture and not on informal institutions. The case of electricity in Sub-Saharan Africa. The future of business groups in emerging markets: Long-run evidence from Chile. Studies in Comparative International Development, 37(1): 5785. Saka-Helmhout, A., Chappin, M., & Vermeulen, P. 2020. ), Trade and market in the early empires economies in history and theoryGlencoe: The Free Press. Witt, M. A., & Redding, G. 2013. Formal and informal institutions combine to govern firm behavior. A model of the firms sources of experiential knowledge in the internationalization process. Cambridge: Cambridge University Press. Home country supportiveness/unfavorableness and outward foreign direct investment from China. Bond, M. 1987. The upheaval sweeping through Zimbabwe comes with a new economic and political reality - the informalisation of the country's economy. Journal of International Business Studies, 48(9): 10451064. American Economic Review, 91(5): 13691401. These reconciliation efforts would thus help provide a more solid foundation for work in IB not only on informal institutions, but on institutions in general.