This study aims to explore how MNCs from different market economies perceive and respond to institutional voids in emerging markets. Specifically, it examines whether and why multinational corporations (MNCs) from liberal market economies (LMEs) and coordinated market economies (CMEs) develop different strategic responses to institutional challenges in Egypt.
The study uses an exploratory qualitative methodology using a multiple-case study design to understand how MNCs perceive institutional voids in emerging markets and how they respond based on their home-country institutional embeddedness. The research focuses on German and American MNCs operating in Egypt, using semistructured interviews and triangulating primary and secondary data. Data were analyzed using the Gioia Methodology and grounded theory coding techniques.
This study identifies notable differences in how German (CME) and American (LME) MNCs address institutional voids, despite perceiving these voids similarly. German MNCs favor external, strategic collaborations, such as knowledge clusters and partnerships with government and industry stakeholders, to tackle regulatory opacity and skill mismatches. American MNCs emphasize firm-centered solutions, focusing on internal training, exclusive partnership, and market-driven strategies. These findings suggest that home-country institutional embeddedness influences response strategies but does not necessarily shape void perceptions. In addition, this study introduces a typology of “Varieties of Institutional Responses” (VIR), distinguishing between “arm’s-length market/dyadic” and “strategic-collaborative/network” responses.
This work contributes to international business in three key ways. First, the authors synthesize existing research on institutional voids and MNC responses, presenting a comprehensive framework integrating formal/informal and market/nonmarket voids. Second, the authors advance the discourse on institutional voids by highlighting the role of home-country institutional embeddedness in shaping MNC strategies. Third, focusing on Egypt, the authors address the underresearched institutional dynamics of African economies, exploring how institutional complexities impact MNC behavior.
Policymakers in emerging markets may benefit from understanding how and why the institutional entrepreneurship of MNCs influences their domestic institutional systems.
From a critical management perspective, this paper offers important insights into how the divergent institutional entrepreneurship of MNCs impacts host-country institutional systems in emerging markets.
This study offers a novel perspective on institutional voids by examining how MNCs from different market economies – specifically, German (CMEs) and American (LMEs) – perceive and respond to these voids in the emerging market of Egypt. By introducing the “VIR” typology, which differentiates between “arm’s-length market/dyadic” and “strategic-collaborative/network” responses, this research advances the understanding of how home-country institutional embeddedness influences MNC strategies.
