A Contingency Model of Strategic Responses to the Institutional Challenges in Emerging Countries: Evidence and Findings from Least Developed Countries

The infrastructure development of emerging economies forms new market opportunities with great potential for multinational firms. However, international contractors are faced with extraordinary institutional challenges when investing in emerging countries. Extant studies of international contractors’ institutional pressures in emerging economies mainly focus on the awareness of, impacts of, and learning about the institutional pressures; few studies have investigated how to cope proactively with the institutional challenges. This study investigated how international contractors should deal with the institutional challenges in emerging countries. We developed a contingency model of strategic responses to institutional challenges, evaluated the model, and applied the model to some common institutional challenges in emerging countries. A case study provided empirical evaluation and exploratory findings. A new pattern of the response to institutional challenges, which is psychological in nature, was discovered in the case study.