Institutional change and strategic choice: debating the ‘stage-model’ of strategy in emerging economies

Abstract

The popular ‘stage-model’ of strategic choice amid institutional change is found unable to account for the diverse strategies in emerging economies, which, this essay argues, is due to the model’s misplaced search for standard strategies which are said to be (1) dictated by linear transition stages and (2) determining the performance of stylized ‘firm types’. Assuming historical inevitability and blind to human agency, the model is at odds with Knight’s notion of uncertainty, with North’s thesis of adaptive efficiency and with Schumpeter’s theorizing on entrepreneurship. Studies on strategy in emerging economies, such as in the case of contemporary China, are in urgent need of an actor-centred, process-oriented and uncertainty-sensitive reorientation. This step, we conclude, may emerge by learning from the ‘practice-turn’ in the social sciences, taking politics seriously, incorporating evolution/complexity insights and enriching the methodology toolkit.

Keywords:

• China
• emerging economies
• institutional change
• stage-model
• strategic choice