Multinationals and Institutions: An Agency-oriented, Integrated Perspective

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Abstract

Recent years have seen several major contributions that apply insights from institutional theory to the study of multinational corporations (MNCs), in particular through the distinction between home- and host-country effects. However, MNCs continue to pose a challenge to institutional analysis. This paper aims to confront these challenges by developing an alternative perspective that acknowledges institutional agency. It poses a duality between structure and agency in accordance with Gidden's structuration theory and argues that institutional contradictions within and between organizational fields, together with the interpretative ambiguity of institutions, allow for institutional 'play'. What results is a double fragmentation, both among and within organizational fields and between agents, which makes that institutions do not only constrain but also enable. Existing institutions often provide the necessary building blocks for institutional innovation as agents have the creative freedom to recombine existing practices through bricolage. Institutions are therefore both 'medium' and 'outcome'. For such a perspective, the MNC, with is multiple and fragmented environment, does no longer pose a fundamental challenge but is within the reach of institutional analysis. To theorize the implications for MNCs we can draw on alternative perspectives that stress strategic and political behaviour. They discuss how subsidiaries are relatively autonomous and highlight the importance of power relations within MNCs. It can therefore be no surprise that the integration of these alternative approaches with the institutional perspective answers to a widely expressed ambition within the MNC literature. Moreover, it does not merely bring theoretical overview but can contribute to our understanding. It can be argued that both 'institutional' and 'political' approaches would benefit. Most obvious is how political awareness adds to the agency understanding of institutional theory. But institutional awareness can also provide an important input to political approaches. First of all, it illustrates how agency is constrained. Moreover, institutions can be a resource that specific parties within the MNC can draw upon. This holds in particular for subsidiary managers that may strengthen their organizational influence by stressing the need to align with host environments. To argue the possible contribution of this integrated framework, the paper presents several concepts from the literature that illustrate the character of institutional processes presented here, such as 'Anglo-Saxonization', 'transactional social space' and the 'liability of foreignness'. The paper concludes by raising two important questions for future research about the relevance of institutional arguments in the analysis of MNCs and the challenges of empirical research.
Original languageEnglish
Title of host publicationhost publication
Publication statusPublished - Mar 2012
EventAIB-UKI Conference - University of Liverpool
Duration: 1 Jan 1824 → …

Conference

ConferenceAIB-UKI Conference
CityUniversity of Liverpool
Period1/01/24 → …

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