Miss

Journal of International Business Studies (2008) 39, 920–936

& 2008 Academy of International Business All rights reserved 0047-2506 $30.00
www.jibs.net

PERSPECTIVE

An institution-based view of international
business strategy: a focus on
emerging economies
Mike W Peng1,
Denis YL Wang2
and Yi Jiang3
1
School of Management, University of Texas at
Dallas, Richardson, TX, USA;2Department of
Management, Chinese University of Hong Kong,
Shatin, Hong Kong; 3Department of
Management, California State University,
East Bay, Hayward, CA, USA

Correspondence:
MW Peng, School of Management,
University of Texas at Dallas, Box 830688,
SM 43, Richardson, TX 75083, USA.
Tel: þ 1 972 883 2714;
Fax: þ 1 972 883 6029;
E-mail: mikepeng@utdallas.edu

Received: 20 December 2004Revised: 27 February 2007
Accepted: 14 May 2007
Online publication date: 3 April 2008

Abstract
Leveraging the recent research interest in emerging economies, this Perspective paper argues that an institution-based view of international business (IB)
strategy has emerged. It is positioned as one leg that helps sustain the ‘‘strategy
tripod’’ (the other two legs consisting of the industry-and resource-based
views). We then review four diverse areas of substantive research: (1)
antidumping as entry barriers; (2) competing in and out of India; (3) growing
the firm in China; and (4) governing the corporation in emerging economies.
Overall, we argue that an institution-based view of IB strategy, in combination
with industry- and resource-based views, will not only help sustain astrategy
tripod, but also shed significant light on the most fundamental questions
confronting IB, such as ‘‘What drives firm strategy and performance in IB?’’
Journal of International Business Studies (2008) 39, 920–936.
doi:10.1057/palgrave.jibs.8400377
Keywords: institutions;
emerging economies

institution-based

view;

international

business

strategy;

INTRODUCTION
Whatdrives firm strategy in international business (IB)? What
determines the success and failure of firms around the world?
These are some of the most fundamental questions confronting the
IB field (Peng, 2004a). Traditionally, there are two perspectives that
address these two questions. An industry-based view, represented
by Porter (1980), argues that conditions within an industry, to a
largeextent, determine firm strategy and performance. A resourcebased view, exemplified by Barney (1991), suggests that it is firmspecific differences that drive strategy and performance. These
influential views have been developed primarily in the field of
strategic management. While IB and strategy are closely allied
fields (Peng, 2006; Ricart, Enright, Ghemawat, Hart, & Khanna,
2004), what are thecontributions of IB research that can add to our
understanding of the two crucial questions raised earlier?
Insightful as the industry- and resource-based views are, they can
be criticized for largely ignoring the formal and informal institutional underpinning that provides the context of competition
among industries and firms studied with these lenses (Kogut,
2003). In other words, theyassume institutions as ‘‘background’’.
This is not surprising, because industry- and resource-based views

An institution-based view of international business strategy

Mike W Peng et al

921

arise primarily out of research on competition in
the United States, in which it may seem reasonable
to assume a relatively stable, market-based institutional framework. Once we study competitionaround the world, it is evident, as shown by decades
of IB research, that the world is different. Even
among developed economies, there are significant
differences in terms of how competition is organized (Hall & Soskice, 2001; Lewin & Kim, 2004;
Redding, 2005; Ring, Bigley, D’Aunno, & Khanna,
2005; Whitley, 1994). More recently, as researchers
increasingly probe into emerging economies whose...