Conceptualizing institutional voids in terms of severity and how the home country affects this understanding

Abstract

Internationalizing into African markets is often portrayed as difficult due the presence of “institutional voids”. However, the lack of familiarity that MNEs may have of African markets may result in (Western-centric) biases of African institutions. To mitigate this, we examine a case study of how institutional voids were experienced by a South African MNE that internationalized into Nigeria. We ask how an MNE’s home country institutional experience affects the conceptualization of the severity of institutional voids? We demonstrate that institutions are not monolithic but layered and dynamic and that voids were not experienced homogenously. Managers distinguished between dimensions of institutional voids: those they anticipated beforehand and those that were unexpected, as well as the volatility associated with how rapidly and frequently the institutions changed. Furthermore, these voids were interpreted relative to the institutional context of both their home country and the prior locational portfolio of the MNE.

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