Institutions, transaction costs, and international strategy

With three essays, I explore how institutions and strategic decision makers interact to influence international business strategies. Drawing on the context of cross-border transactions, essay 1 (Chapter 2) proposes a theoretical model of binding international commercial arbitration (BICA) selection, which may support market exchange where traditional domestic court systems may fail. By integrating legal theory and transaction costs economics (TCE), essay 1 provides insights into why firms may adopt BICA over domestic courts and suggests that BICA will be more effective based on the institutional environment and certain qualities of the firm. The second essay (Chapter 3) uses the setting of Chinese semiconductor and pharmaceutical companies to explore how organizational slack may influence the strategic posture of the firm through managerial sensemaking. In essay 2, I consider how absorbed and unabsorbed slack may influence managerial threat and opportunity interpretation. In turn, I evaluate how threat and opportunity interpretation may activate (or suppress) entrepreneurial processes, routines, and methods in the firm. In this way, the second essay contributes to the literature on firm strategic posture by bridging organization theory, sensemaking, and entrepreneurial orientation. Essay 3 (Chapter 4) places an emphasis on the manager as the decision maker and considers how different demographic qualities may influence the governance choice of firms making cross-border investment decisions. In particular, I integrate the concept of legal astuteness with CEO demographics to develop a related connection between upper echelon theory and TCE. The third essay contributes to the literature on the multinational enterprise and entry mode decisions by addressing whether or not CEO demographics may influence governance choices, and thus the boundaries of the firm. Overall, this dissertation deepens our understanding of the institutional nuances of governance choices and the influence of individual strategic decision making in the international setting.