Exploring the institutional pressures that affect international new ventures

Abstract

Objective: This article aims to identify the link between institutional pressures and strategic responses of international new ventures (INVs). Research Design & Methods: This article reviews and theoretically synthesises extensive literature from the institutional and international entrepreneurship theories. The discussion leads to the formulation of four research propositions. Findings: The relationship between institutions and entrepreneurial firms’ activities remains lacking in relevant research. Thus, given the constraints of INVs, the suggested propositions assist in identifying the nature of the institutional pressures exerted on entrepreneurial firms. Through the breakdown of the institutional pressure determinants, three groups of pressures are discussed. The text suggests that coercive, normative, and mimetic pressures evoke more active strategic responses of INVs, as internationally oriented, entrepreneurial, technology-driven firms. The institutions and INVs strategic responses may have a bidirectional relationship. At the same time, legitimacy constraints to INVs may involve more than one scenario of how the INVs behave, which converts to a set of various responses to institutions, which lead to embedded relationships with institutions. Implications & Recommendations: The formulated research propositions illuminate numerous practical implications, leading to future research agendas. Researchers studying international entrepreneurship and entrepreneurs will benefit from reflecting on the proposed framework’s dimensions and interactions. International new ventures need to legitimise themselves in various institutional environments. However, they can be active partners in forming their institutional context through progressive involvement. Another input is aimed at policymakers looking to shape the institutional environment. Contribution & Value Added: The theoretical contribution of this article lies in its introduction of a set of research propositions that explain the relationship between the institutional pressures and strategic responses of INVs and set a future research directions. The value-added consists in exploring institutional pressures that lead to more active responses of INVs because of entrepreneurial firms’ specifics and emphasising the role of INVS in the building of institutions.