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journal article Jul 05, 2022

Formal institutional context in global strategy research: A layer cake perspective

Daniel S. Andrews ORCID Stav Fainshmidt ORCID Andreas P. J. Schotter ORCID Ajai Gaur ORCID
Global Strategy Journal Vol. 14 No. 1 pp. 3-24 · Wiley
View at Publisher Save 10.1002/gsj.1455
Abstract
AbstractResearch summaryWe offer a novel view of formal institutions as a layer cake, suggesting a structural relationship between higher‐level and lower‐level institutions. In this context, inter‐layer conflict imposes complex pressures on multinational corporations (MNCs). These tensions have become more rife amid the growth in global connectedness and the commensurate increase in the importance of within‐country differences. Drawing on political science and economic geography research, we introduce regime type and the distribution of economic resources as conditions under which inter‐layer conflict is most likely to arise. We leverage two caselets to illustrate the inter‐layer conflict and the novel response options MNCs can deploy. Our perspective advances the theoretical understanding of intra‐national institutional diversity, laying the groundwork for future research at the nexus of institutional theory and global strategy.Managerial summaryFirms often encounter opposing pressures in their operating environments because institutions within the nation‐state impose misaligned policies. Despite acknowledging that such interactions exist, firms traditionally did not make it an integral part of their strategy. We demarcate how formal institutions cascade, forming a layer cake of relevant influences whereby the structural relationship between higher‐level and lower‐level institutions may impose complex pressures when in conflict. We turn to political science and economic geography literatures for explanations of when such conflict is most likely and offer a window into the responses by multinational firms using caselets within the COVID‐19 pandemic context. We offer new avenues for research on the ways in which institutions function to affect multinational firms in a global economy increasingly characterized by institutional complexity.
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Metrics
23
Citations
93
References
Details
Published
Jul 05, 2022
Vol/Issue
14(1)
Pages
3-24
License
View
Authors
D
Daniel S. Andrews

Ivey Business School, Western University London Ontario Canada

S
Stav Fainshmidt

Ivey Business School, Western University London Ontario Canada

A
Andreas P. J. Schotter

Ivey Business School, Western University London Ontario Canada; Institute for International Business, Vienna University of Economics and Business Vienna Austria

A
Ajai Gaur

Management and Global Business Department Rutgers Business School, Rutgers University Newark New Jersey USA

Cite This Article
Daniel S. Andrews, Stav Fainshmidt, Andreas P. J. Schotter, et al. (2022). Formal institutional context in global strategy research: A layer cake perspective. Global Strategy Journal, 14(1), 3-24. https://doi.org/10.1002/gsj.1455
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