The Effect of Institutional Voids, Informal Institutions, and Institutional Tension on Escaped-Based Internationalization from Developed Countries

ABSTRACT

Literature on firm internationalization has predominantly examined host-country determinants while largely overlooking home-country environments. Existing theory on home-country institutional voids has been limited to emerging markets, positing that the absence of formal institutions influences organizational strategy. We extend this theory by incorporating developed market multinational enterprises, informal institutions, and institutional tension. We propose and find that a formal void related to labor laws is positively associated with internationalization, whereas an informal institution related to worker collectivism is negatively related to it. We also suggest, and partially find, that interaction between these conflicting forces mitigates their effects.

KEYWORDS:

• Escape-based internationalization
• home-country institutions
• informal institutions
• institutional voids
• institutions
• internationalization
• labor relations
• MNEs

Disclosure statement

No potential conflict of interest was reported by the author(s).