The Effect of Institutional Context, Distance, and Routine Complexity on the Transfer of Routines Across Borders
DOI:
https://doi.org/10.33423/ajm.v24i4.7337Keywords:
management, international transfer of routines, institutional context, local adaptation time, system dynamics, simulation, Headquarters and Subsidiary relationshipAbstract
Transferring routines and practices within Multinational Enterprises (MNEs) is a prevalent and, at times, tedious process. New institutional context imposes forces for local adaptation, which disrupts the stability of the routine - stability due to the interplay between ostensive (the codified and/or abstract version of the routine) and performative (the practiced version) aspects of the routine. Change in routines is then needed to ensure local adaptation and the routine reaches a new state of stability. Our study focuses on the micro-processes of the transfer process and the pertinent states of stability and change in the focal routines and practices. We use simulation experiments and examine the effect of intuitional pressures for local adaptation. The local adaptation speed of ostensive routine is shown to matter. Slow enactment of the revised version of the ostensive routine (i.e. implementation of the locally adapted routine) at the subsidiary level can disrupt the stability of the routine.
References
Adler, N., & Hashai, N. (2007). Knowledge flows and the modelling of the multinational enterprise. Journal of International Business Studies, 38(4), 639–57.
Anand, G., Gary, J., & Siemen, E. (2011). Decay, shock, and renewal: Operational routines and process entropy in pharmaceutical industry. Organization Science, 23(6), 1523–1783.
Ansari, S.M., Fiss, P.C., & Zajac, E.J. (2010). Made to fit: How practices vary as they diffuse. Academy of Management Review, 35(1), 67–92.
Bauer, H.H., & Fisher, M. (2000). Product life cycle patterns for pharmaceuticals and their impact on R&D profitability of late mover products. International Business Review, 9(6), 703–725.
Bhagat, R.S., Kedia, B.L., Harveston, P.D., & Triandis, H.C. (2002). Cultural variations in the cross-border transfer of organizational knowledge: An integrative framework. Academy of Management Review, 27(2), 204–21.
Birkinshaw, J.M., & Morrison, A.J. (1995). Configurations of strategy and structure in subsidiaries of multinational corporations. Journal of International Business Studies, 26(4), 729–53.
Casciaro, T., & Piskorski, M.J. (2005). Power imbalance, mutual dependence, and constraint absorption: A closer look at resource dependence theory. Administrative Science Quarterly, 50(2), 167–99.
Chandra, Y., & Wilkinson, I.F. (2017). Firm internationalization from a network-centric complex-systems perspective. Journal of World Business, 52(5), 691–701.
Cheng, L.T.W., & Leung, T.Y. (2004). A comparative analysis of the market-based and accounting-based performance of diversifying and non-diversifying acquisitions in Hong Kong. International Business Review, 13(6), 763–89.
Cohen, W.M., & Levinthal, D.A. (1990). Absorptive capacity: A new perspective on learning and innovation. Administrative Science Quarterly, 35(1), 128–52.
D’Adderio, L. (2014). The replication dilemma unravelled: How organizations enact multiple goals in routine transfer. Organization Science, 25(5), 1325–50.
Dinkevych, E., Wilken, R., Aykac, T., Jacob, F., & Prime, N. (2017). Can outnumbered negotiators succeed? The case of intercultural business negotiations. International Business Review, 26(3), 592–603.
Durvasula, S., Netermeyer, R.G., Andrews, J.C., & Lysonski, S. (2006). Examining the cross-national applicability of multi-item, multi-dimensional measures using generalizability theory. Journal of International Business Studies, 37(4), 469–83.
Eapen, A. (2013). FDI spillover effects in incomplete datasets. Journal of International Business Studies, 44(7), 719–44.
Feldman, M.S., & Pentland, B.T. (2003). Reconceptualizing organizational routines as a source of flexibility and change. Administrative Science Quarterly, 48(1), 94–118.
Fiss, P.C., Kennedy, M.T., & Davis, G.F. (2012). How golden parachutes unfold: Diffusion and variation of a controversial practice. Organization Science, 23(4), 1077–1099.
Flores, R., Aguilera, R.V., Mahdian, A., & Vaaler, P.M. (2013). How well do supranational regional grouping schemes fit international business research models? Journal of International Business Studies, 44(5), 451–74.
Fuad, M., & Gaur, A.S. (2019). Merger waves, entry-timing, and cross-border acquisition completion: A frictional lens perspective. Journal of World Business, 54(2), 107–18.
Jensen, R.J., & Szulanski, G. (2007). Template use and the effectiveness of knowledge transfer. Management Science, 53(11), 1716–30.
Khan, F.R., Munir, K.A., & Willmott, H. (2007). A dark side of institutional entrepreneurship: Soccer balls, child labour and postcolonial impoverishment. Organization Studies, 28(7), 1055–1077.
Kingsley, A.F., Noordewier, T.G., & Vanden Bergh, R.G. (2017). Overstating and understating interaction results in international business research. Journal of World Business, 52(2), 286–295.
Knudsen, T. (2008). Organizational routines in evoultionary theory. In M. C. Becker (Ed.), Handbook of organizational routines. Cheltenham: Edward Elgar.
Kostova, T. (1999). Transnational transfer of strategic organizational practices: A contextual perspective. Academy of Management Review, 24(2), 308–24.
Li, J., & Rugman, A.M. 2007. Real options and the theory of foreign direct investment. International Business Review, 16(6), 687–712.
March, J.G. (1991). Exploration and exploitation in organizational learning. Organization Science, 2(1), 71–87.
Marquis, C. (2003). The pressure of the past: Network imprinting in intercorporate communities. Administrative Science Quarterly, 48(4), 655–89.
Meyer, J.W., & Rowan, B. (1977). Institutionalized organizations: Formal structure as myth and ceremony. American Journal of Sociology, 83(2), 340–63.
Miner, A.S., Ciuchta, M.P., & Gong, Y. (2008). Organizational routines and organizational learning. In Becker C., Markus, (Ed.), Handbook of organizational routines. Cheltenham: Edward Elgar.
Mudambi, R., & Navarra, P. (2004). Is knowledge power? Knowled flows, subsidiary power and rent-seeking within MNCs. Journal of International Business Studies, 35(5), 385–406.
Nelson, R.R., & Winter, S.G. (1982). An Evolutionary Theory of Economic Change. Cambridge, MA: Belknap Press/ Harvard Business Press.
Oliver, C. (1992). The antecedents of deinstitutionalization. Organization Studies, 13(4), 563–88.
Pentland, B.T., Hærem, T., & Hillison, D. (2010). Comparing organizational routines as recurrent patterns of action. Organization Studies, 31(7), 917–40.
Pfeffer, J., & Salancik, G.R. (1978). The external control of organizations: A resource dependence perspective. New York: Harper & Row.
Rerup, C., & Feldman, M.S. (2011). Routines as a source of change in organizational schemata: The role of trial-and-error learning. Academy of Management Journal, 54(3), 577–610.
Szulanski, G., & Jensen, R.J. (2008). Growing through copying: The negative consequences of innovation on franchise network growth. Research Policy, 37(10), 1732–41.
Tailan, C., & Seth, A. (2009). A dynamic model of the choice of mode for exploiting complementary capabilities. Journal of International Business Studies, 40(3), 365–87.
Thompson, J.D. (1967). Organizations in Action. New York: McGraw Hill.
Winter, S.G., & Szulanski, G. (2001). Replication as strategy. Organization Science, 12(6), 730–43.
Wu, J., Lao, K.F., Wan, F., & Li, J. (2019). Competing with multinational enterprises' entry: Search strategy, environmental complexity, and survival of local firms. International Business Review, 28(4), 727–38.
Zbaracki, M.J., & Bergen, M. (2010). When truces collapse: A longitudinal study of price-adjustment routines. Organization Science, 21(5), 955–72.
Zucker, L.G. (1987). Institutional theories of organization. Annual Review of Sociology, 13, 443–464.
