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Asia Pacific Journal of Management

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01-12-2009

Strategy of firms in unstable institutional environments

Authors: Mehdi Farashahi, Taïeb Hafsi

Published in: Asia Pacific Journal of Management | Issue 4/2009

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Abstract

Institutional instability as one of the most common characteristics of developing countries and its impacts on the strategy of firms is explored in this study. We conducted detailed field research based on 32 semi-structured interviews with top managers of textile firms in Iran. Results show that managers in developing countries engage in a political struggle to ensure that institutional uncertainty is balanced by a reasonable political give and take. It is argued that power and legitimacy are key resources for firms' survival in institutionally unstable environments. Some theoretical foundations for the strategy of firms in unstable institutional environments are developed.

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One should be careful in generalizing about developing countries because they are a widely diverse set of countries. The situation of highly structured societies such as that of China is vastly different of the situation of smaller countries. Our data will show that middle-sized developing countries in transition, such as Iran, are in the situation described.

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This is a saying in Iran meaning that each one is obliged to care only about his/her own safety and interests.

This is a saying in Iran suggesting that one who only cares about the daily works.

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Title: Strategy of firms in unstable institutional environments
Authors: Mehdi Farashahi
Taïeb Hafsi
Publication date: 01-12-2009
Publisher: Springer US
Published in: Asia Pacific Journal of Management / Issue 4/2009
Print ISSN: 0217-4561
Electronic ISSN: 1572-9958
DOI: https://doi.org/10.1007/s10490-008-9129-9

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