Purpose
Despite the significant potential of Malaysia and Indonesia as emerging Southeast Asian retail markets, their nuanced differences in relation to global retailers have not been fully analyzed. Drawing the institutional theory, this study analyzed the institutional environments of Malaysian and Indonesian markets contrasting their similarities and differences in formal (i.e. explicit, regulatory) and informal (i.e. tacit normative and cultural-cognitive) institutions.
Design/methodology/approach
The analysis of this exploratory is based on a large number of publicly available sources, including research papers, government documents and reports. The paper triangulated the validity of the data with multiple sources, including scholars, business professionals and government officers at the chamber of commerce in the countries.
Findings
Although the two countries adjacently located in Southeast Asia share Islam as a major religion and the Bahasa language, there are significant differences in their formal institutions related to the retail environment, such as openness to foreign investment and retail infrastructure. Based on the analyses, this study provided recommendations for global retail companies targeting or planning to enter the Malaysian and Indonesian markets.
Originality/value
This paper was an original application of institutional theory to Malaysia and Indonesia and analyzed the two emerging economies where institutions vary and are less visible to many multinational companies.
