Strategy of firms in unstable institutional environments

Institutional instability as one of the most common characteristics of developing countries and its impacts on the strategy of firms is explored in this study. We conducted detailed field research based on 32 semi-structured interviews with top managers of textile firms in Iran. Results show that ma...

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Bibliographic Details
Published in:Asia Pacific journal of management 2009-12, Vol.26 (4), p.643-666
Main Authors: Farashahi, Mehdi, Hafsi, Taïeb
Format: Article
Language:English
Subjects:
Business and Management
Developing countries
Economic activity
Emerging markets
Firms' strategy
LDCs
Legitimacy
Management
Organization theory
Political behavior
Politics
Strategic management
Strategic planning
Studies
Transition economies
Unstable institutional environments
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Summary:Institutional instability as one of the most common characteristics of developing countries and its impacts on the strategy of firms is explored in this study. We conducted detailed field research based on 32 semi-structured interviews with top managers of textile firms in Iran. Results show that managers in developing countries engage in a political struggle to ensure that institutional uncertainty is balanced by a reasonable political give and take. It is argued that power and legitimacy are key resources for firms' survival in institutionally unstable environments. Some theoretical foundations for the strategy of firms in unstable institutional environments are developed.
ISSN:0217-4561
1572-9958
DOI:10.1007/s10490-008-9129-9