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Abstract. This article focuses on a key question: Why do strategies of firms from different countries differ? Drawing from recent research on business strategies in Asian organizations, this article outlines the emergence of an institution-based view of business strategy which sheds light on why firms differ, reviews four streams of research in a broad range of countries, and critiques and extends some of the current work by suggesting a number of future research directions.
Keywords: institution, business strategy, Asia
This article focuses on a key question: Why do strategies of firms from different countries and regions differ? This is the very first question among the five most fundamental questions in strategic management raised by Rumelt, Schendel and Teece (1994:564).1 Since the diversity of firm strategies around the world can arise as the result of many possible forces internal or external to the organization, this question engenders a wide variety of disparate answers from economists (Nelson, 1991) and sociologists (Carroll, 1993). Thus far, strategy researchers have primarily focused on industry conditions (Porter, 1980) and firm resources (Barney, 1991) as drivers of firm differences, leading to competition-and resource-based perspectives, respectively.
Drawing from recent research on Asian organizations, I argue that in addition to these existing theories, a new, institution-based view has emerged to account for differences in business strategy. A number of scholars suggested that in addition to industry and firm level conditions, a firm also needs to take into account wider influences from sources such as the state and society when crafting and implementing its strategies (DiMaggio and Powell, 1991; Oliver, 1997). These influences are broadly considered as institutional frameworks (North, 1990; Scott, 1995). When applied to strategy research, this new perspective, consequently, can be called an institution-based view of business strategy (Peng, 2000a, 2002; Peng and Heath, 1996).
Since no firm can be immune from institutional frameworks in which it is embedded, there is hardly any dispute that institutions matter. In order to make further theoretical progress, researchers must "tackle the harder and more interesting issues of how they matter, under what circumstances, to what extent, and in what ways" (Powell, 1996:297). This article, consequently, has three objectives. First, extending earlier theoretical work (Peng, 2000a, 2002; Peng and Heath, 1996), this article outlines the...