A Conceptual View of Internationalization Strategies under Dual Institutional Pressures for Legitimacy and Conformity

Abstract

Internationalizing operations requires multinational corporations (MNCs) to develop strategies capable of simultaneously dealing with external institutional pressures towards legitimacy and internal institutional pressures towards conformity. In this conceptual paper we develop a set of theory-driven propositions on what are the internationalization strategies that MNCs must deploy given their institutional environments. Especially emphasizing the external institutional environment and differences in institutional development, we also approach the relevance of considering the internal institutional environment to the firm. Entry strategies tend to be based on low-involvement modes and on partnerships, such as joint-ventures, to enter institutionally immature or institutionally farther countries. Acquisitions and partnerships may be used when internal institutional pressures are weaker. We conclude with a broad discussion and avenues for future research.

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