Isomorph isomorphic influences and aspiration: reference group choice in entry mode decisions.

Zheng, Congcong

ENTRY MODE CHOICE AND ISOMORPHIC INFLUENCES

As a form of market entry, foreign entry offers opportunities such as potential new markets, new resources, and new relationships, but at the same time raises challenges regarding the uncertain sizing of the market, the regulations in the host country, as well as applicability of its resources and expertise in the new market. Once the managers have selected the target entry country, they could choose their international expansion through exporting, participating in licensing or franchising arrangements, forming strategic alliances and joint ventures, making acquisitions, or establishing wholly own subsidiaries. The entry mode choice could be under influences of economic variables such as transaction costs, oligopolistic industry structures, and the nature of resources that the focal firm possesses (Buckley & Casson, 1976; Caves, 1996). While the economic perspectives focus on individual transactions and the appropriate methods to maximize economic gains and efficiency, or to minimize the transaction costs, such perspectives have been criticized as being under-socialized (Granovetter, 1985) and do not take into consideration the social perspectives of the managers (Guillen, 2001).

A fundamental assumption of foreign market entry is that "knowledge in a foreign environment is different from that accumulated in its home country" (Guillen, 2003). Because of such difference and disparity, in entering a new market, firms usually rely on external environment and social actors for guidance of appropriate behaviors. MNCs usually resort to signals from different aspects of environment to determine the appropriate actions to enter a new and unfamiliar country. Such isomorphic influences could be evident when managers choose the target country/location to invest in (Chan, Makino, & Isobe, 2006; Henisz & Delios, 2001), the type of investment plants (i.e., for distribution or manufacturing purpose) (Delios & Henisz, 2003), the choice of entry mode (Lu, 2002), and the sequence of entry mode (joint venture and/or wholly owned manufacturing plants) in a particular country (Guillen, 2003).

When making the entry mode choices, managers are under the influence of the broader social and institutional environment, and their decisions exist in the larger environment which is filled with the norms, standards, and expectations from the relevant parties. In conditions of uncertainty, managers cannot predict the consequences of their actions or behavior, lack information of the cause-effect relationship, and are unable to assess the full range of possible outcomes, states and the probabilities of each outcome (Milliken, 1987). As a result, firms look for external signals as for what the appropriate and legitimate actions are. A large number of peer organizations undertaking the same action could send signals that such actions are legitimate (Zucker, 1977); likewise, adoption of practices by big and successful corporations could legitimize certain behaviors (Haunschild & Miner, 1997). In some circumstances, repeated adoption by the MNCs themselves in previous entries would offer the practice internal legitimacy (Lu, 2002).

Three reference groups are particularly relevant when managers are making entry mode choices: the host country, the industry that the firm is in, and previous entries by MNC parents (Chan, et al., 2006). Those different reference groups send different types of signals of various strengths as to what the legitimate entry choices should be. The host country reference signifies the entry mode choices made by other firms in the same target country; industry reference signifies the entry mode choice made by other firms in the same industry in similar host countries; and MNC parent reference signifies the entry mode choices made by the same MNCs in previous entries. Host countries are the external institutional environments in which foreign entrants are embedded. They consist of various authorities and stakeholders, including governmental agencies, customers, suppliers, labor unions and trade associations, which shape the social, cultural and economic environment in the host country. At the national level, each country has its own regulatory, normative, and cultural-cognitive institutions and varies in their degree of centralization of controls for political and economical activities (Mahmood & Rufin, 2005). Countries usually have their own distinct institutional profiles and certain expectations of the definition of legitimate behaviors in their respective countries. When entering a country for the first time, MNCs could follow the prior entry mode of foreign entrants in the host country, since the entry mode bestows legitimacy to what is acceptable in the target host environment.

Industry norms offer another benchmark for the investing MNCs. Industry fields are fields where different actors and firms could easily recognize other actors and their actions. Since firms in the same industry usually characterize environments similarly (Huff, 1982), they observe, perform comparisons with other industry actors, and are likely to imitate each other's strategic moves, processes, and mechanisms. They often have abundant information about each other's strategic moves, and engage in collective sense-making. Previous research has suggested that the institutional logic that provides the guidelines for business (e.g., industry standards, production commercialization, and supporting infrastructure) varies across industries (Makhija, Kim et al., 1997). The third area of legitimating power comes from internal sources--parent firm's previous entries. Parent firms form an internal institutional environment which connects foreign subsidiaries with headquarters, defines appropriate actions and behaviors, and form rules that make sense of their previous actions and guide their future actions (Francis, Zheng, & Mukherji, 2009; Scott, 2001). MNCs are the internal institutional environments in which subsidiaries are embedded and exert a high level of pressure on their foreign subsidiaries to conform to the norms and practices of the parent firm (Davis, Desai et al., 2000). As MNCs adopt a particular entry mode more frequently, the mode also gradually gains the status of "taken-for-granted" (Zucker, 1977). Managers making entry decisions are thus more likely to follow and adopt the same entry mode that has been used previously.

Even though previous research has documented the influences that various isomorphic forces exert on the entrant firms (Chan, et al., 2006; Guillen, 2003; Henisz & Delios, 2001; Lu, 2002), it has devoted little theoretical analysis as to which set of social actors will be imitated and have the most salience on entrant's decisions. When facing various reference groups, what is the foreign entrant's confidence level in imitating the reference groups? Tackling the issue of confidence in imitation, recent research has drawn attention to the issues of reference group characteristics (such as variance in behavior within the reference group and size of the reference group) and their influence on the imitation of behavior (Greve, 1996; Rhee, Kim, & Han, 2006). Those factors might influence decision makers' ability to interpret a reference group's behavior and decode the intention behind such behavior. We argue that the aspiration level of the foreign firm will influence the risk level that the firm will sustain, thus affecting how the firm chooses the most relevant reference groups to guide its behavior (Greve, 1998). Our main argument is that once firms satisfy country institutional influences, their reference group choice reflects their own risk levels, which was determined by their performance level in relation to the aspiration levels.

To understand firm's entry mode choice to a target country, it is important to understand the sources of power for the host country. The institutional environment in the host country has three pillars: regulatory, cognitive and normative (Kostova & Zaheer, 1999; Scott, 2001), which draws their power from coercive, mimetic and normative mechanisms. The regulatory pillar refers to the rules and laws that exist to ensure stability and order in societies; the cognitive pillar refers to the established cognitive structures in the society, together with the "taken-for-granted" beliefs in the society; and the normative pillar refers to the widely shared norms and values that give rise to stable social and business arrangements. A country's institutional environment could either be restrictive or less restrictive, i.e., allowing a smaller or greater degree of economic freedom (Meyer, Estrin et al., 2009; Chan & Makino, 2007). A restrictive country does not possess market-supporting institutions and does not permit freedom of individuals and firms in the country to pursue business activities (Kane, Holmes et al., 2007). For instance, a restrictive country might have insufficient or defective rules and regulations in various aspects of starting and acquiring a business in that country, such as: receiving construction permits, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, and enforcing contracts and closing a business (World Bank, 2010). Foreign entry mode choice has to reflect the extent to which the foreign subsidiary conforms to the institutional domain of the host-country environment. At the national level, a foreign firm entering a restrictive institutional environment must comply with the local institutional environments since nonconformity can likely lead to penalties such as denial of entry, forced exit or demise of the subsidiary. For instance, Google's high profile exit from mainland China reflects fundamental differences between the firm and the country regarding their attitude towards censorship (Jacobs & Helft, 2010). Similarly, in a longitudinal study of entry and exit behaviors of UK firms, Requena-Silvente (2005) found that state dependence is the largest explanatory factor in explaining firm entry and exit behaviors among factors such as sunk cost, firm size, age, ownership, and industry structure. In a restrictive institutional environment, the reference group of the host country carries the most clear, un-complicated signal of what is acceptable, legitimate and appropriate in the host country, and offers decision makers the most uncomplicated signal as compared to any other reference groups of industry or MNC parent. So we hypothesize:

Proposition 1: In first entering a country with restrictive institutional environment, the multinational corporation is more likely to choose the entry mode choice most commonly used in the host country, as opposed to the entry mode of its industry peers or of its own entry in other environments.

Situations are more complex when a firm is entering a less restrictive country environment. In a less restrictive country environment, the host country's government most likely would not mandate the entry mode by foreign entrants; rather, it may allow a broader scope of entry mode choices by them. In such an environment, a foreign entrant's choice of entry mode could be primarily influenced by its acceptable risk levels, which is determined by whether their performance is above or below their aspiration levels. The firm's foreign entry represents a critical and potentially risky change for the MNC (Haveman, 1993). Firms generally exhibit an aversion to change, which is similar to an individual's aversion to risk (Greve, 1998). Decision making research has shown that people prefer to gamble with lower variances of expected value and have an aversion to risk (Lopes, 1987). However, individual risk taking behaviour changes according to the context of choice and risk taking. An individual's risk taking appears to increase when he/she fails to reach a specific goal or aspiration level (Kahneman & Tversky, 1979). This is because an individual who fails to attain a goal (or a given aspiration level) might attempt to recover his/her loss and is more likely to engage in riskier choices than those who have already surpassed their goal or aspiration level. This risk-taking behavior at the individual level persists at the organizational level (March, 1988; March & Shapira, 1987; 1992). In business situations, similar to personal settings, managers tend to take fewer risks when performance surpasses their goals and aspiration levels, and take higher risks when performance is lower than their goals or aspirations.

Change, in the form of market entry or foreign entry, is often prompted by performance feedback from the environment and the managers' interpretation of this feedback (Milliken & Lant, 1991). When evaluating such feedback, aspiration level is an important benchmark. At the organizational level, an aspiration level has been defined as a "reference point that is psychologically neutral" (Kameda & Davis, 1990) or "the smallest outcome that would be deemed satisfactory by the decision maker" (Schneider, 1992). According to March & Simon (1958), an organization's aspiration level is a result of a bounded rational decision maker's attempt at transforming a continuous measure of performance into a discrete measure of success and failure. It is the dividing line between success and failure in the decision maker's perception, and interpretation of the results of a prior action or strategic move.

Decision makers generate an aspiration level from available information, most importantly from accounting and financial performance information such as return on sales or return on assets (Greve, 1998). One important way for decision makers to generate aspiration levels is to use the experience of the focal organization as the benchmark of historical aspiration levels. Past performance may be one way to indicate how well the organization can perform, and can be a natural reference point of how the organization should perform in the future. Alternatively, decision makers can use current performance of other organizations as a benchmark of social aspiration level.

We argue that firms are going to be influenced by whether they are above or below their aspiration levels when they are making foreign entry mode choices. Firms are more likely to choose the entry mode that has been used by their industry peers rather than their own internal entry mode (sanctioned by the MNC parents) when they are performing below aspiration levels. For those firms, their usual, taken-for-granted entry mode within the MNC system is likely to be questioned because of the performance shortfall. As a result, managers are more likely to engage in problemistic search activities for alternative ways of doing business (Cyert & March, 1963; Greve, 2003). Problemistic search, as a response to an organizational problem, signifies the middle step of a sequential process of decision makers comparing the performance with an aspiration level, initiating search if the performance is low relative to the aspiration level, and making changes if they can find an acceptable solution to the performance shortfall (Cyert & March, 1963). As a goal-oriented behaviour, problemistic search increases when the organization performs below the aspiration level and decreases when organization performs above the aspiration level. In international entry, the entry mode of the industry peers offers the signal that it is not only a legitimate one but possibly a superior one. It may also send a signal to the firm that its peers have better information about the utility of entry modes and that the particular entry mode has technical value (Lieberman & Asaba, 2006). A firm that is performing below its aspiration levels is thus more likely to be aware of, search for and adopt such a technical superior practices. Thus, we propose:

Proposition 2: In first entering a less restrictive country environment, the multinational corporation that is performing below its aspirations is more likely to choose the entry mode that's used in its industry, as opposed to the modes most commonly used in the host country or its own entry in other environments.

On the other hand, the MNC's previous entry mode in other environments will offer a satisfactory and legitimate way if the firm is performing at or above its aspiration levels. MNC's norms are created through the process of its group members collectively defining what they do, identifying themselves, and establishing a cognitive base of their collective entity (DiMaggio & Powell, 1983). The literature of organizational theory suggests that once an organizational practice is in place, firms are likely to define it as an internally legitimate practice and to adopt similar practices in the future. This also contributes to the strategic inertia where as time proceeds, firms are less likely to make structural changes since firms face inter-organizational and intra-organizational constraints (Hannan & Freeman, 1977, 1984). For an organization contemplating foreign entry, we maintain that the most immediate, salient, central, and enduring normative characteristic is organizational identity, as opposed to industry identity or country identity (i.e. national culture) (Albert & Whetten, 1985). For a firm that's performing above its aspiration levels, it is less likely to question its identity and the internally legitimate way of entry, and is more likely to continue to use the same entry mode that has been used in its previous entries. Thus we propose:

Proposition 3: In first entering a less restrictive country environment, the multinational corporation that is performing at or above its historical aspiration level is more likely to choose the entry mode that's been mostly used in its own previous entries, rather than the entry mode most commonly used in the host country or the industry.

DISCUSSIONS AND CONCLUSION

We began this article by asking the following question: in situations where managers face varied, often conflicting modes of influence, how do they make sense of their complex institutional environment in choosing their entry mode to a new country? Specifically, which reference group offers the most salient influence when a firm is attempting entry to a new country? The issues of uncertainty, risk, and imitation are not unknown in the internationalization literature; however, the questions of how to deal with the combined isomorphic influences of the host country, industry, and the firm's own experience have not been elaborated upon. In this article, we address the uncertainty that is encountered by a foreign entrant when they are attempting first entry in a foreign market and how the firm chooses the appropriate reference group to model their behaviors by. We develop propositions to understand how a firm responds to uncertainty based upon the institutional profile of the target country, the industry norm, and the firm's own performance. We emphasize that the uncertainty being generated at the different levels of country, industry and firm has varying salience on a firm's decisions. A firm's response to those external influences is shaped by its own performance level at the time of foreign entry.

Countries have the most power over entry firms since they can impose laws, rules and regulations on firms. As a result, firms have limited choices when complying with host country institutional profiles: either they conform, or they exit and are forced to abandon potential gains from foreign investments. In comparison, an industry has relatively less powerful influence, but exerts powerful mimetic pressures on firms in the same industrial field in their entry decisions. An industry norm carries information as the modeled organizations are seen as legitimate or successful, providing good templates for firms with inferior performance or social position. Firm's own experience exerts the least amount of coercion and its normative power, the taken-for-granted way of business is likely to be questioned when firms are performing below their aspiration levels. When firms are performing above their aspiration level, however, they are less likely to change the existing way of doing business as managers consider previous actions to have been appropriate and suitable for the internal environments.

Our propositions are consistent with previous empirical research in the international entry literature and institutional theory. Previous research distinguished between firm-specific uncertainty, which refers to the "uncertainty derived from an organization's unfamiliarity with market characteristics", and policy uncertainty, which refers to "the uncertainty derived from characteristics of the policymaking apparatus of a market that make the characteristics of the market unstable or difficult to forecast" (Henisz & Delios, 2001). Research has found that imitation generally reduces uncertainty, particularly firm-specific uncertainty, but does not reduce political hazard-related uncertainty (Chan & Makino, 2007). Viewed from our framework, this finding is not surprising because the restrictive and coercive forces at the country-level are most deterministic prior to first foreign entry, since they offer the strongest signal as to what is expected, appropriate, and legitimate in the host country.

We highlight the complexity of isomorphism and its varying influences on managerial decisions depending on the firm's performance levels (Kostova & Zaheer, 1999). Previous theoretical work in the foreign entry literature has highlighted the pressure of isomorphism and importance of legitimacy in MNCs. Kostova & Zaheer (1999) illuminate the environmental and organizational complexity in the legitimization process. We explore further in order to understand such "complexity" of isomorphism, and introduce the concept of aspiration level in determining the appropriate reference groups when making entry mode choice decisions.

The propositions presented here are part of a growing stream of institutional literature that investigates how the pressures of isomorphism influence firm behaviors and structures (Greve, 1996; Haveman, 1993; Strang & Meyer, 1993; Strang & Tuma, 1993). We emphasize the role of the decision maker when facing the constraints of isomorphic forces from multiple levels. Our work advances the stream of literature in institutional theory that stress social agents' role, their receptivity to institutional forces, and their heterogeneity (Strang & Meyer, 1993; Strang & Tuma, 1993). The stance of decision makers in the face of institutional constraints could be one of active choice, change, and challenge--not just conformity (Oliver, 1991). By choosing different reference groups, decision makers exert a certain level of agency and can achieve a degree of flexibility by complying with institutional influences of different levels of salience.

Our paper is one of the first to attempt to integrate institutional theory, which traditionally emphasizes the "have to" aspect of firm choices with the aspiration, learning, and risk preferences of the managerial decision makers. This intersection of constraints and choices is a fertile area for future empirical and theoretical work. We acknowledge that our paper is only a theoretical framework which needs to be further corroborated by empirical research. This article puts forward testable propositions that advance international business theory in the context of entry mode choice. Although some evidence exists regarding the effects of institutional influences on entry mode choice, such results have been subject to lack of data from firm performances before and after entry. We highlight the need for longitudinal studies that track a firm's performance and entry mode choices across different countries. Future studies may include matched-pairs panel data of companies in the same industry that allow a comparison of entry modes and behaviors of firms that perform above and under their aspiration levels.

In addition, future research can continue to investigate the following questions: How could a firm's organizational characteristics, such as size, age, reputation, network position etc. influence the firm's propensity to choose relevant reference groups? How does the reference group choice change with a firm's experience in a particular country, i.e., how does the reference group change when firms are making repeated entry in the same host country? How does the reference group choice affect timing of the entry or sequence of entry (i.e., through licensing/franchising, or establishing distributing or manufacturing plants)? The research on institutional theory and organizational learning shows great promise for helping us understand these fundamental questions.

In conclusion, we believe that our theoretical paper contributes to the foreign entry mode literature by offering a new perspective on institutional influences: namely, that decision makers are under the combined influence of institutional pressures and internal organizational pressures when making entry mode choices. Decision makers are liable to take different levels of risk following prior performance levels and such risk preference may evidence in their entry in a different market. Our investigation is one of the first papers to examine the role of aspiration in shaping institutional influences of organization, and we hope that our study will motivate others to extend this interesting line of research.

REFERENCES

Aharoni, Y. 1966. The Foreign Investment Decision Process. Boston, M.A.: Harvard Business School.

Albert, S. & D. Whetten. 1985. Organizational identity. In Research in Organizational Behavior. Cummings L.L., Staw B.M. (Eds). Greenwich, CT: JAI Press:263-295.

Baum, J.A.C., T.J. Rowley, et al. 2005. Dancing with strangers: Aspiration performance and the search for underwriting syndicate partners. Administrative Science Quarterly, 50: 536-575.

Buckley, P.J. & M. Casson. 1976. The Future of the Multi-National Enterprise. New York: Holmes & Meier.

Buckley, P.J., & M. Casson. 1985. The Economic Theory of the Multinational Enterprise. London: Macmillan.

Caves, R. 1974. Multinational Firms, Competition and Productivity in Host-Country Markets. Economica, 41: 176-93.

Caves, R.E. 1996. Multinational Enterprise and Economic Analysis. 2nd ed. Cambridge: Cambridge University Press.

Chan, C.M. & S. Makino. 2007. Legitimacy and multi-level institutional environments: implications for foreign subsidiary ownership structure. Journal of International Business Studies, 38: 621-638.

Chan, C.M., S. Makino, & T. Isobe. 2006. Interdependent behavior in foreign direct investment: The multi-level effects of prior entry and prior exit on foreign market entry'. Journal of International Business Studies, 37: 642-65.

Chang, S.-j. 1995. International expansion strategy of Japanese firms: Capability building through sequential entry. Academy of Management Journal, 38 (2): 383-407.

Chang, S.-j. & P. Rosenzweig. 2001. The choice of entry mode in sequential foreign direct investment. Strategic Management Journal, 22: 747-776.

Cyert, R.M. & J.G. March. 1963 [1992]. A Behavioral Theory of the Firm. Malden, MA: Blackwell.

Davis, P.S., A.B. Desai, J.D. Francis. 2000. Mode of international entry: An isomorphism perspective. Journal of International Business Studies, 31 (2): 239-258.

Delios, A. & W.J. Henisz. 2003. Policy uncertainty and the sequence of entry by Japanese firms, 1980-1998. Journal of International Business Studies, 34: 227-41.

DiMaggio, P.J. & W.W. Powell. 1983. The Iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48: 147-60.

Dunning, J.H. 1995. Reappraising the eclectic paradigm in an age of alliance capitalism. Journal of International Business Studies, 26 (3): 461-91.

Francis, J., C. Zheng, & A. Mukherji. 2009. An institutional perspective on foreign direct investment: A multi-level framework. Management International Review, 49 (5): 565-584.

Granovetter, M. 1985. Economic action and social structure: The problem of embeddedness. American Journal of Sociology, 91: 481-510.

Greve, H.R. 1996. Patterns of competition: The diffusion of a market position in radio broadcasting. Administrative Science Quarterly, 41 (1): 29-60.

Greve, H.R. 1998. Performance, aspirations and risky organizational change. Administrative Science Quarterly, 43 (1): 58.

Greve, H.R. 2003. Organizational Learning from Performance Feedback: A Behavioral Perspective on Innovation and Change. Cambridge University Press.

Guillen, M.F. 2001. The Limits of Convergence: Globalization and Organizational Change in Argentina, South Korea, and Spain. Princeton, NJ: Princeton University Press.

Guillen, M.F. 2002. Structural inertia, imitation, and foreign expansion: South Korean firms and business groups in China. Academy of Management Journal, 45 (3): 509-25.

Guillen, M.F. 2003. Experience, imitation, and the sequence of foreign entry: Wholly owned and joint-venture manufacturing by South Korean firms and business groups in China 1987-1995. Journal of International Business Studies, 34: 185-98.

Hannan, M.T. & J. Freeman. 1977. The population ecology of organizations. American Journal of Sociology, 82: 929-964.

Hannan, M.T. & J. Freeman. 1984. Structural inertia and organizational change. American Sociological Review, 49 (April): 149-164.

Haunschild, P.R. & A.S. Miner. 1997. Modes of interorganizational imitation: The effects of outcome salience and uncertainty. Administrative Science Quarterly, 42 (3): 472-500.

Haveman, H. 1993. Follow the leader: Mimetic isomorphism and entry into new markets. Administrative Science Quarterly, 38: 593-627.

Henisz, W.J. & A. Delios. 2001. Uncertainty, imitation and plant location: Japanese multinational corporations, 1990-1996. Administrative Science Quarterly, 46 (3): 443-75.

Huff, A.S. 1982. Industry influences on strategy reformulation. Strategic Management Journal, 3: 119-31. Jacobs, A. & M. Helft. 2010. Google, citing attack, threatens to exit China. New York Times, New York: January 12, 2010.

Kahneman, D. & A. Tversky. 1979. Prospect theory: An analysis of decision under risk. Econometrica, 47: 263-91. Kameda, T. & J.H. Davis. 1990. The Function of the reference point in individual and group risk decision making. Organization Behavior and Human Decision Process, 46: 55-76.

Kane, T., K. Holmes, et al. 2007. 2007 Index of Economic Freedom. Heritage Foundation. Washington, D.C.

Kogut, B. & U. Zander. 1993. Knowledge of the firm and the evolutionary theory of the multinational corporation'. Journal of International Business Studies, 24: 625-45.

Kostova, T. & S. Zaheer. 1999. Organizational legitimacy under conditions of complexity: The case of the multinational enterprise. Academy of Management Review, 24 (1): 64-81.

Lieberman, M.B. & S. Asaba. 2006. Why do firms imitate each other? Academy of Management Review, 31 (2): 366-85.

Lopes, L.L. 1987. Between hope and fear: The psychology of risk. Advances in Experimental Social Psychology, 20: 255-95.

Lu, J.W. 2002. Intra- and inter-organizational imitative behavior: Institutional influences on Japanese firms' entry mode choice. Journal of International Business Studies, 33 (1): 19-37.

Makhija, M.V., K. Kim, et al. 1997. Measuring globalization of industries using a national industry approach: Empirical evidence across five countries and over time. Journal of International Business Studies, 28 (4): 379-710.

Mahmood, I.P. & C. Rufin. 2005. Government's dilemma: The role of government in imitation and innovation. Academy of Management Review, 30 (2): 998-360.

March, J.G. & Z. Shapira. 1987. Managerial perspectives on risk and risk taking. Management Science, 33: 1404-18.

March, J.G. & Z. Shapira. 1992. Variable risk preferences and the focus of attention. Psychological Review, 99 (1): 172-83.

March, J.G. & H.A. Simon. 1958 [1993]. Organizations (2nd ed.). Cambridge, Mass., USA: Blackwell.

Meyer, K.E., S. Estrin, et al. 2009. Institutions, resources, and entry strategies in emerging economies. Strategic Management Journal, 30: 61-80.

Milliken, F.J. 1987. Three types of perceived uncertainty about the environment. Academy of Management Review, 12 (1): 133-43.

Milliken, F.J. & T.K. Lant. 1991. The effects of an organization's recent performance history on strategic persistence and change: The role of managerial interpretations. In Shrivastava, Paul, Anne Huff, & Jane Dutton (eds). Advances in Strategic Management, Volume 7, pp.129-156, Greenwich, CT: JAI Press.

Oliver, C. 1991. Strategic responses to institutional processes. Academy of Management Review, 16 (1): 145-179. Requena-Silvente, F. (2005). The Decision to Enter and Exit Foreign Markets: Evidence from U.K. SMEs. Small Business Economics, 25 (3), 237-253.

Rhee, M., Y.C. Kim & J. Han. 2006. Confidence in imitation: Niche-width strategy in the UK automobile industry. Management Science, 52 (4): 501-13.

Schneider, S.L. 1992. Framing and conflict: Aspiration level contingency, the status quo, and current theories of risky choice. Journal of Experimental Psychology: Learning, Memory, and Cognition, 18: 1040-57.

Scott, W.R. 2001. Institutions and Organizations. (2nd ed). Thousand Oaks, Calif.: Sage Publications.

Strang, D. & J.W. Meyer. 1993. Institutional conditions for diffusion. Theory and Society, 22: 487-511.

Strang, D. & N.B. Tuma. 1993. Spatial and temporal heterogeneity in diffusion. American Journal of Sociology, 99: 614-39.

Vernon, R. 1979. The Product cycle hypothesis in a new international environment. Oxford Bulletin of Economics and Statistics, 41 (4): 255.

Yiu, D. & S. Makino. 2002. The Choice between joint venture and wholly owned subsidiary: An institutional perspective. Organization Science, 13 (6): 667-84.

World Bank. (2010). Doing Business. World Bank. Washington, DC.

Zucker, L.G. 1977. The role of institutionalization in cultural persistence. American Sociological Review, 42 (5): 726-43.