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Responding to Conflicting Institutional Demands in the Context of Institutional Voids: Korean Multinationals in Cameroon

안영훈
한국전략경영학회 (Korean Strategic Management Society)|2024.12|전략경영연구 (Journal of Strategic Management)|제27권 제3호|pp. 77-105|DOI 10.17786/jsm.2024.27.3.003

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참고문헌

키워드

AfricaLegitimacyInstitutional ComplexityInstitutional voidsSubsidiary Strategy
주제분류경영학

초록

This study investigates how foreign subsidiaries navigate conflicting stakeholder demands in environments characterized by weak and challenging institutions. While prior research has examined the complexities faced by foreign subsidiaries due to their dual embeddedness— balancing expectations between the host country and the parent firm—there is limited exploration of the internal complexities within host countries, particularly where foreign subsidiaries encounter multiple, often conflicting, demands from diverse local stakeholders. Institutional complexity is prevalent in countries with institutional voids, where institutions are underdeveloped or ineffective. The study uses a comparative case study approach, using Korean subsidiaries operating in Cameroon, a country with a weak institutional framework, to analyze how these firms manage complex and conflicting institutional demands. The findings indicate that Korean subsidiaries experience institutional complexity across cognitive, normative, and regulatory pillars, as they respond to conflicting expectations and pressures. To navigate these challenges, firms adopt two primary strategies: innovation and compromise, which allow them to balance stakeholder expectations and secure legitimacy within the host environment. This study contributes to the literature on institutional voids and legitimacy, offering insights into how Korean firms establish legitimacy in an African context marked by institutional weakness and complexity.

Abstract

This study investigates how foreign subsidiaries navigate conflicting stakeholder demands in environments characterized by weak and challenging institutions. While prior research has examined the complexities faced by foreign subsidiaries due to their dual embeddedness— balancing expectations between the host country and the parent firm—there is limited exploration of the internal complexities within host countries, particularly where foreign subsidiaries encounter multiple, often conflicting, demands from diverse local stakeholders. Institutional complexity is prevalent in countries with institutional voids, where institutions are underdeveloped or ineffective. The study uses a comparative case study approach, using Korean subsidiaries operating in Cameroon, a country with a weak institutional framework, to analyze how these firms manage complex and conflicting institutional demands. The findings indicate that Korean subsidiaries experience institutional complexity across cognitive, normative, and regulatory pillars, as they respond to conflicting expectations and pressures. To navigate these challenges, firms adopt two primary strategies: innovation and compromise, which allow them to balance stakeholder expectations and secure legitimacy within the host environment. This study contributes to the literature on institutional voids and legitimacy, offering insights into how Korean firms establish legitimacy in an African context marked by institutional weakness and complexity.

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