Chapter 3: Theoretical Lens

A researcher’s choice of framework is not arbitrary but reflects important personal beliefs and understandings about the nature of knowledge, how it exists (in the metaphysical sense) in relation to the observer, and the possible roles to be adopted and tools to be employed to analyze the reality.

Institutional theory can befittingly explore and explain the approaches of multinational enterprises (MNEs) in emerging markets (EMs) as “firms are embedded in country-specific institutional arrangements” (Busenitz, Gomez, & Spencer, 2000, p. 994). This idea has been further elaborated by Parsons (1962, pp. 63–64) that every organization is a subsystem of “a wider social system which is the source of the ‘meaning,’ legitimation, or higher-level support which makes the implementation of the organisation’s goals possible.” Institutional theory provides rich theoretical foundation for examining a wide range of critical issues and also allows for theorizing at multiple levels of analysis, which is essential for MNE research (Djelic & Quack, 2003); therefore, an increasing number of international management scholars are applying institutional theory to the study of MNEs (Dacin, Goodstein, & Scott, 2002). It is all the more important to apply it to study those MNEs that are operating in the institutional environment of EMs that have a peculiar social system accentuated with prolonged existence of terrorism.