Session 145

Institutions and Governance in an Uncertain World

Track G

Date: Tuesday, October 13, 2009


Time: 11:30 – 12:45

Common Ground

Room: Meeting Room 16

Aya Chacar, Florida International University

Title: A Participatory Feedback Model of Microfinance Institutions


  • Faiza Khoja, University of Houston
  • Shabnam Lutafali, University St. Thomas

Abstract: A reductionst approach to development is to have a one-dimensional vision. In this paper, we propose that in order to achieve sustainable development it is necessary for institutions to promulgate both horizontal and vertical relationship among beneficiaries and between the latter and the institutions (Khoja & Shabnam, 2008). This participatory, feedback approach to development would promote local skilled people to be active social and economic agents of development while allowing institutions to be innovative and adaptive. We use an example of a microfinance institution (MFI) to explicate the model. In general, most microfinance institutions have provided financial and non-financial services to the ‘unbankable’ (poor or marginalized) but Grameen Bank has enhanced its business model by endeavoring into business-social ventures.

Title: Bounded Reliability As a New Behavioral Foundation For Research on MNE Governance


  • Alain Verbeke, University of Calgary
  • Nathan Greidanus, University of Manitoba

Abstract: Modern transaction cost economics (TCE) thinking has developed into a key intellectual foundation of international business (IB) research, but the Williamsonian version has faced substantial criticism for adopting the behavioral assumption of opportunism. In this paper we assess both the opportunism concept and existing alternatives such as trust within the context of IB research. As a substitute for the often-criticized assumption of opportunism, we propose the envelope-concept of bounded reliability (BRel), an assumption that appears to represent more accurately and more completely the reasons for failed commitments, without invalidating the other critical assumption in conventional TCE (and internalization theory) thinking, namely the widely accepted envelope-concept of bounded rationality (BRat). BRel as an envelope-concept includes the following two main components within the context of global MNE management: opportunism as intentional deceit and benevolent preference reversal.

Title: Global Patent Systems - Integration and Divergence


  • Deli Yang, Trinity University

Abstract: This paper proposes an integrated framework to address the integration and divergence of patent systems across the world. It addresses three objectives (1) the extent of patent system integration across the world; (2) the varied extent of their development across patent mechanism, administration and enforcement areas; (3) the variables that discriminate between the patent systems in developed and developing countries. The findings show that countries have not reached an ‘ideal’ level of integrationl. Conformity is stronger in the field of patent mechanisms than in administration and enforcement, which require more national efforts. The findings also suggest that the frequency of patent laws revisions, non-infringement stipulations and compulsory licensing provisions are the reasons behind the divide between patent systems development in developed and developing countries.

Title: Institutional, Industrial and Firm-Level Determinants of International Technology Diffusion: The Case of Airline E-Tickets


  • Roberto Martin Galang, Ateneo de Manila University

Abstract: This paper investigates the factors that affect the international diffusion of beneficial technological innovations across firms by looking at the global spread of a single strategic decision: e-ticketing among airlines. Electronic ticketing is the most critical tool for cutting costs in the airline industry; yet, despite the myriad gains provided to individual airlines, the pace by which this technology was adapted by different firms was remarkably slow. Utilizing all three legs of the strategy theory tripod, I determine which among the institutional, industrial and resource based factors were most salient in affecting this strategic process. This paper proposes the use of a unique dataset consisting of more than 350 airlines operating in 120 different countries to provide empirical support to the generated hypotheses.

Title: The Declining Trade Power of the European Union: Firms and International Governance


  • Steven McGuire, University of Sussex
  • Johan Lindeque, University of Applied Sciences and Arts Northwestern Switzerland

Abstract: The notion that the European Union is a trade power, using access to its market as a means of securing its preferences, is central to studies of the Union’s international presence. The immense size of the EU market is held to be an important lever in multilateral, regional and bilateral trade negotiations. Thus, the EU is able to press trade partners across a range of issue areas and, to some extent, compensate for its lack of hard (i.e. military) power. Europe’s leverage with trade partners is predicated on credible threats to withhold access to its markets. This paper queries the continuing effectiveness of acting this way, as the EU is increasingly constrained by the success of the governance structures it put in place.

Title: The Use and Evolution of Governance Designs in Transnational Transactions: An Evolutionary Angle on Coping with Uncertainty


  • Joerg Freiling, University of Bremen
  • Holger Nieswandt, University of Bremen

Abstract: Uncertainty is a core challenge of international transactions. Firms use governance designs to reduce uncertainty by stabilizing the agents’ expectations. However, efficient governance designs are often not available since national law cannot easily be applied in cross-border transactions. Thus, they are to be developed by means of private and public ordering in the market process. Empirical evidence from two rather different industries (timber trade and off-shoring of software development) suggests that trial and error processes of the agents involved create path dependence of institutional evolution. Moreover, path dependence research allows for interpreting the empirical findings. The qualitative surveys reveal that all mechanisms of institutional path research matter and that the evolution processes in the two rather different industries are quite similar in many regards.

All Sessions in Track G...

Sun: 10:00 – 11:30
Session 270: Globalizing the Young Venture: A Conversation with Four High Tech CEOs
Sun: 13:00 – 14:30
Session 271: The Duke Offshoring Research Network Project: Implications for Research and Practice
Sun: 15:00 – 16:30
Session 272: Location, Knowledge, and Competitive Dynamics: New Research Directions
Sun: 16:30 – 17:30
Session 311: Global Strategy, IG Meeting
Mon: 12:45 – 14:00
Session 138: Doing Business in China
Mon: 15:45 – 17:00
Session 139: Offshoring & Outsourcing
Mon: 17:15 – 18:30
Session 142: Liability of Foreignness
Tue: 10:00 – 11:15
Session 140: Global Diversification and Firm Performance
Tue: 11:30 – 12:45
Session 145: Institutions and Governance in an Uncertain World
Tue: 14:30 – 15:45
Session 141: Entry Strategy & Location Choice
Session 143: Managing MNC Subsidiaries: Innovation, Control and Subsidiary Initiatives
Wed: 10:00 – 11:15
Session 146: Global Knowledge Search
Wed: 11:30 – 12:45
Session 147: Internationalizing the Firm: Institutions, Emerging Markets and Performance Considerations

Strategic Management Society

Washington DC