Sub-national market-supporting institutions and export behaviors

Abstract

The business environment of emerging and transition economies (EE&TE) is highly volatile and unpredictable, mainly because they lack strong formal market-supporting institutions, especially in their early phase of transition (McMillan, 1995; Peng, 2003). In this context, certain authors argue that a firm’s strategy can be better explained and predicted by the institutionbased view, followed by the industry-based view and the resource-based view (Hoskisson et al., 2000; Peng et al., 2008; Wright et al., 2005). Despite the fact that institutional conditions vary not only between countries but also within a country and between industries (Gao et al., 2010; Wright et al., 2005), prior studies often focus on national institutions and neglect the sub-national institutional level (Meyer and Nguyen, 2005). However, these lower institutional levels play an important role because they regulate firms’ day-to-day activities (Luo and Junkunc, 2008). The current study aims to fill this gap by investigating the impact of the market-supporting institutions at the sub-national level on the export behaviors (i.e. export propensity, export mode choice, and export intensity) of firms in the context of an emerging economy in Southeast Asia, namely Vietnam (Arnold and Quelch, 1998; Ellis, 2010). By doing this, we also enlarge the scope of investigation of export studies beyond the usually studied emerging economies such as China, Brazil, Russia or other countries in Central and Eastern Europe (Aulakh et al., 2000; Gao et al., 2010; Shinkle and Kriauciunas, 2010).