Inhoud
The Nature of Institutional Voids in Emerging Markets. Khanna and Palepu
(2010)..........................................................................................................3
What is Really Different About Emerging Market Multinationals?" by
Ramamurti (2012)........................................................................................5
International Business Responses to Institutional Voids" by Doh et al.
(2017)..........................................................................................................7
Entrepreneurship in and Around Institutional Voids: A Case Study from
Bangladesh" by Mair and Marti (2009).......................................................10
The Role of Corporations in Addressing Non-Market Institutional Voids
During the COVID-19 Pandemic: The Case of an Emerging Economy" by
Rodrigues and Child (2023)........................................................................12
The Base-of-the-Pyramid Orientation and Export Performance of
Vietnamese SMEs: A Pathway to Sustainability and Growth, Nguyen et al.
(2023)........................................................................................................15
Entrepreneurship and Innovation in Ghana: A Path to Economic Growth.
Robson et al., (2009)..................................................................................17
Barriers to Innovation and Innovation Performance: The Mediating Role of
External Knowledge Search in Emerging Economies, De Oliveira (2022). .20
Capital Is Not Enough: Innovation in Developing Economies, Bradley et al.
(2012)........................................................................................................23
Corporate Social Responsibility and Stock Prices After the Financial Crisis:
The Role of Strategic CSR Activities, Havlinova & Kukacka (2023)............26
Export Strategies and Performance of Firms from Emerging Economies: A
Comprehensive Analysis. Aulakh et al. (2020)...........................................28
International Expansion of Emerging Market Enterprises: A Springboard
Perspective. Luo & Tung, 2007...................................................................31
The Evolution of Strategic Asset-Seeking Acquisitions by Emerging Market
Firms. Elia & Santangelo (2017).................................................................35
Building the Social Structure of a Market: A Case Study of CARE
Bangladesh’s Dairy Sector Intervention. McKague et al, (2015)................37
Scaling Impact: Template Development and Replication at the Base of the
Pyramid. Chilova & Ringov (2016).............................................................39
Microfranchising in Base-of-the-Pyramid Markets: Institutional Challenges
and Adaptations to the Franchise Model, Kistruck et al., (2011)................43
Scaling Innovations: The Journey of Grassroots Entrepreneurs in Low-
Income Settings, Wieringa (2019)..............................................................46
,Microcredit: A Blessing or a Burden for the Poor? A Comprehensive Meta-
Analysis. Chliova et al., 2015.....................................................................51
The Evolution of EMNCs and EMNC Thinking: A Capabilities Perspective.
Lessard (2014)...........................................................................................54
How Powerful Political Ties Appropriate Resources and How Weaker
Organizations Protect Themselves: A Case Study from Indonesia. Dieleman
& Widjaja (2019)........................................................................................59
How Are Institutional Capabilities Transferred Across Borders? Carney et
al., 2016.....................................................................................................62
,The Nature of Institutional Voids in Emerging
Markets. Khanna and Palepu (2010)
Emerging markets are often viewed as promising growth engines of the
global economy. However, despite their forecasted potential and
increasing integration into global markets, these economies are marked by
profound institutional challenges. While dismantling government controls
and opening up to international trade and investment can initiate market
growth, it does not guarantee the immediate development of mature,
efficient market structures. Emerging markets remain deeply influenced by
historical, cultural, and political legacies, which give rise to “institutional
voids.”
What are Institutional Voids?
At the core of any market lies the ease with which buyers and sellers can
transact. In developed markets, this ease is facilitated by a range of
intermediaries that provide essential services like contract enforcement,
credit systems, information dissemination, and logistical support. These
intermediaries help ensure transparency, reduce transaction costs, and
mitigate risks.
Emerging markets, however, often lack such infrastructures. Buyers and
sellers struggle to find one another, evaluate the quality of goods and
services, or resolve disputes in a timely manner. For example, resolving a
legal dispute in India can take anywhere from five to fifteen years. These
gaps, termed "institutional voids," create inefficiencies and raise the costs
of doing business.
Such voids are prevalent across sectors. For instance, rural markets in
India rely on traveling salespeople to demonstrate and promote products
in villages where media penetration is limited. These informal institutions
often serve as substitutes for the missing formal market infrastructure but
remain inaccessible to many potential participants.
Why Markets Fail and How to Make Them Work
Markets fail when there is a lack of trust, information asymmetry, or
conflicts of interest between buyers and sellers. The classic “used car”
market example illustrates how the absence of credible information leads
to inefficiency: buyers underpay for high-quality goods and overpay for
low-quality ones. This drives out honest sellers, leaving only “lemons” in
the market.
The solution lies in creating intermediaries that reduce uncertainty and
provide reliable information. For example, in developed markets,
independent institutions like credit bureaus, consumer advocacy groups,
and financial regulators serve as intermediaries to reduce asymmetries
and facilitate transactions. These institutions benefit the market as a
whole, though they may face resistance from groups that profit from
institutional voids.
, How Developed Markets Work
Developed economies offer a wealth of institutions that reduce transaction
costs, enhance trust, and ensure fair play. Their product, capital, and
labour markets are characterized by the following features:
Product Markets
Consumers in developed economies benefit from access to reliable
information through advertising, reviews, and independent ratings. Retail
chains perform intermediary functions such as screening products for
quality, displaying goods, and providing customer support. Credit card
systems and logistics providers further streamline transactions, supported
by legal frameworks that enforce contracts and ensure consumer
protection.
Capital Markets
Financial systems in developed economies are underpinned by
transparency and credibility. Mechanisms like financial reporting,
accounting standards, and rating agencies allow investors to assess
opportunities effectively. Regulators ensure compliance, while stock
exchanges and financial intermediaries provide liquidity and reduce risks.
These institutions collectively lower the cost of capital and foster
confidence among investors.
Labor Markets
Educational institutions certify human capital, while placement agencies
and headhunters bridge the gap between employers and employees.
Regulations and employment contracts protect both parties, while unions
and unemployment insurance balance power dynamics. Such frameworks
ensure flexibility for companies and security for workers.
These institutional structures make developed markets efficient,
transparent, and resilient, creating a sharp contrast with the fragmented
systems found in emerging economies.
Structural Definition of Emerging Markets
Emerging markets are defined by the absence or inefficiency of critical
intermediaries. This "emergingness" exists on a continuum, ranging from
entirely dysfunctional markets rife with voids to highly developed markets
with minimal gaps. Notably, institutional voids are not exclusive to
emerging markets. For instance, the subprime mortgage crisis in the US
revealed significant institutional failures, where financial innovation
outpaced the capacity of intermediaries to manage risks.
Emerging markets evolve slowly, as creating functional intermediaries
requires time, expertise, and often political will. Despite the best intentions
of governments and businesses, newly established institutions in these
markets rarely operate at the same efficiency as their counterparts in
developed economies. This persistence of institutional gaps is a defining
characteristic of emerging markets.
Spotting and Responding to Institutional Voids
The Nature of Institutional Voids in Emerging Markets. Khanna and Palepu
(2010)..........................................................................................................3
What is Really Different About Emerging Market Multinationals?" by
Ramamurti (2012)........................................................................................5
International Business Responses to Institutional Voids" by Doh et al.
(2017)..........................................................................................................7
Entrepreneurship in and Around Institutional Voids: A Case Study from
Bangladesh" by Mair and Marti (2009).......................................................10
The Role of Corporations in Addressing Non-Market Institutional Voids
During the COVID-19 Pandemic: The Case of an Emerging Economy" by
Rodrigues and Child (2023)........................................................................12
The Base-of-the-Pyramid Orientation and Export Performance of
Vietnamese SMEs: A Pathway to Sustainability and Growth, Nguyen et al.
(2023)........................................................................................................15
Entrepreneurship and Innovation in Ghana: A Path to Economic Growth.
Robson et al., (2009)..................................................................................17
Barriers to Innovation and Innovation Performance: The Mediating Role of
External Knowledge Search in Emerging Economies, De Oliveira (2022). .20
Capital Is Not Enough: Innovation in Developing Economies, Bradley et al.
(2012)........................................................................................................23
Corporate Social Responsibility and Stock Prices After the Financial Crisis:
The Role of Strategic CSR Activities, Havlinova & Kukacka (2023)............26
Export Strategies and Performance of Firms from Emerging Economies: A
Comprehensive Analysis. Aulakh et al. (2020)...........................................28
International Expansion of Emerging Market Enterprises: A Springboard
Perspective. Luo & Tung, 2007...................................................................31
The Evolution of Strategic Asset-Seeking Acquisitions by Emerging Market
Firms. Elia & Santangelo (2017).................................................................35
Building the Social Structure of a Market: A Case Study of CARE
Bangladesh’s Dairy Sector Intervention. McKague et al, (2015)................37
Scaling Impact: Template Development and Replication at the Base of the
Pyramid. Chilova & Ringov (2016).............................................................39
Microfranchising in Base-of-the-Pyramid Markets: Institutional Challenges
and Adaptations to the Franchise Model, Kistruck et al., (2011)................43
Scaling Innovations: The Journey of Grassroots Entrepreneurs in Low-
Income Settings, Wieringa (2019)..............................................................46
,Microcredit: A Blessing or a Burden for the Poor? A Comprehensive Meta-
Analysis. Chliova et al., 2015.....................................................................51
The Evolution of EMNCs and EMNC Thinking: A Capabilities Perspective.
Lessard (2014)...........................................................................................54
How Powerful Political Ties Appropriate Resources and How Weaker
Organizations Protect Themselves: A Case Study from Indonesia. Dieleman
& Widjaja (2019)........................................................................................59
How Are Institutional Capabilities Transferred Across Borders? Carney et
al., 2016.....................................................................................................62
,The Nature of Institutional Voids in Emerging
Markets. Khanna and Palepu (2010)
Emerging markets are often viewed as promising growth engines of the
global economy. However, despite their forecasted potential and
increasing integration into global markets, these economies are marked by
profound institutional challenges. While dismantling government controls
and opening up to international trade and investment can initiate market
growth, it does not guarantee the immediate development of mature,
efficient market structures. Emerging markets remain deeply influenced by
historical, cultural, and political legacies, which give rise to “institutional
voids.”
What are Institutional Voids?
At the core of any market lies the ease with which buyers and sellers can
transact. In developed markets, this ease is facilitated by a range of
intermediaries that provide essential services like contract enforcement,
credit systems, information dissemination, and logistical support. These
intermediaries help ensure transparency, reduce transaction costs, and
mitigate risks.
Emerging markets, however, often lack such infrastructures. Buyers and
sellers struggle to find one another, evaluate the quality of goods and
services, or resolve disputes in a timely manner. For example, resolving a
legal dispute in India can take anywhere from five to fifteen years. These
gaps, termed "institutional voids," create inefficiencies and raise the costs
of doing business.
Such voids are prevalent across sectors. For instance, rural markets in
India rely on traveling salespeople to demonstrate and promote products
in villages where media penetration is limited. These informal institutions
often serve as substitutes for the missing formal market infrastructure but
remain inaccessible to many potential participants.
Why Markets Fail and How to Make Them Work
Markets fail when there is a lack of trust, information asymmetry, or
conflicts of interest between buyers and sellers. The classic “used car”
market example illustrates how the absence of credible information leads
to inefficiency: buyers underpay for high-quality goods and overpay for
low-quality ones. This drives out honest sellers, leaving only “lemons” in
the market.
The solution lies in creating intermediaries that reduce uncertainty and
provide reliable information. For example, in developed markets,
independent institutions like credit bureaus, consumer advocacy groups,
and financial regulators serve as intermediaries to reduce asymmetries
and facilitate transactions. These institutions benefit the market as a
whole, though they may face resistance from groups that profit from
institutional voids.
, How Developed Markets Work
Developed economies offer a wealth of institutions that reduce transaction
costs, enhance trust, and ensure fair play. Their product, capital, and
labour markets are characterized by the following features:
Product Markets
Consumers in developed economies benefit from access to reliable
information through advertising, reviews, and independent ratings. Retail
chains perform intermediary functions such as screening products for
quality, displaying goods, and providing customer support. Credit card
systems and logistics providers further streamline transactions, supported
by legal frameworks that enforce contracts and ensure consumer
protection.
Capital Markets
Financial systems in developed economies are underpinned by
transparency and credibility. Mechanisms like financial reporting,
accounting standards, and rating agencies allow investors to assess
opportunities effectively. Regulators ensure compliance, while stock
exchanges and financial intermediaries provide liquidity and reduce risks.
These institutions collectively lower the cost of capital and foster
confidence among investors.
Labor Markets
Educational institutions certify human capital, while placement agencies
and headhunters bridge the gap between employers and employees.
Regulations and employment contracts protect both parties, while unions
and unemployment insurance balance power dynamics. Such frameworks
ensure flexibility for companies and security for workers.
These institutional structures make developed markets efficient,
transparent, and resilient, creating a sharp contrast with the fragmented
systems found in emerging economies.
Structural Definition of Emerging Markets
Emerging markets are defined by the absence or inefficiency of critical
intermediaries. This "emergingness" exists on a continuum, ranging from
entirely dysfunctional markets rife with voids to highly developed markets
with minimal gaps. Notably, institutional voids are not exclusive to
emerging markets. For instance, the subprime mortgage crisis in the US
revealed significant institutional failures, where financial innovation
outpaced the capacity of intermediaries to manage risks.
Emerging markets evolve slowly, as creating functional intermediaries
requires time, expertise, and often political will. Despite the best intentions
of governments and businesses, newly established institutions in these
markets rarely operate at the same efficiency as their counterparts in
developed economies. This persistence of institutional gaps is a defining
characteristic of emerging markets.
Spotting and Responding to Institutional Voids
