How Do Institutional Distance And Bargaining Power Affect The Management Model Of A New Cross-regional Enterprise?

With the opening-up of Chinese market, enterprises have to face increasingly fiercecompetition from around the world. Coupled with a series of reasons, including their ownstrength and resource limits and the guidance of national policy, the implementation ofcross-regional development strategy has become a way to look for a breakthrough. However,due to the dual characteristics of the Chinese market, namely unity and division, enterpriseshave to deal with different institutional environment compared with that in the originallocation during the period of cross-regional expansion. Aiming to share the new market, it isnecessary for enterprises to adapt to the new institutional environment in order to obtain thesupport and recognition of the government, public entities and other communities. Animportant way in this process is to develop a management mode to adapt to the localinstitutional environment. This research mainly studies how institutional distance andbargaining power will affect new entrances in the course of selecting cross-regional enterprisemanagement mode under the special background of transformation in China.Firstly, this paper does some literature review and theoretical analysis on the relationshipbetween institutional distance, bargaining power and a new management mode chosen byenterprises, based on which a preliminary conceptual model is developed. In the followingpart, the study designation is described and research results are obtained through comparisonof two case studies using the method of case research. Then based on the results, propositionsare put forward and the conceptual model is modified. Finally conclusions are drawn bydiscussing and analyzing the results.Through the case discussion, we find that both institutional distance and bargaining powercan have a relatively great impact on the management mode of an enterprise while theenterprise’s unique business mode can play a regulatory role in selecting management mode,especially in terms of organizational structure and mechanisms of power. Regulation distanceand bargaining power have more influence on the source of the senior management team thanoperating mode. The ability of the executive team is entirely determined by institutionaldistance and bargaining power while operating mode doesn’t affect it.