The Emergence of Institution-based Strategy of International Business and the Implications for U.S. Multinational Enterprises

Formal and informal institutions have seriously affected MNEs' activities and their performance in foreign countries, but they have not been adequately considered in the existing research. Recently the institution-based view of strategy focusing on the institutional contexts of different countries has emerged. This paper attempts to integrate the existing approaches in international business strategy, the industrial approach and the resource-based view with the institution-based view, suggesting that an explicit consideration of institutional variables in international strategy formulation be essential. Then we compare the institutional differences between the U.S. and emerging economies and draw important implications for U.S. MNEs.