Essays on global business networks, governance, and institutions

Multinational enterprises (MNEs) are challenged to coordinate activities and diffuse (best) practices in their global business networks, which spans both developed and emerging countries. Particularly in emerging market, MNEs often find themselves navigating formal institutional voids and reconcile differences in local norms and values (informal institutions) between home and host countries. This is why it is important to factor in local institutions of member firms – both formal and informal – in the choice of network governance structure. This PhD thesis aims to understand whether and how local institutions – both formal and informal – influence the efficacy of governance structure in global business networks. It consist of three empirical papers using different research settings, each presenting boundary conditions to effective network governance. Based on primary survey-based and secondary data, I make the following empirical observations: one, network governance can substitute formally weak institutions by providing member firms with means to decrease transaction costs (e.g., resource allocation, capacity building). Two, network governance can stimulate the diffusion of organizational practices when member firms are exposed to favorable institutional norms and values. Three, network governance alone does not suffice to ensure full (i.e., substantive) practice implementation; in order to reduce decoupling behavior, MNEs should also consider firm-internal factors, i.e., the willingness and motivation of member firms to implement the practice. Overall, this thesis brings the interplay between network governance and institutions to the forefront, which opens up interesting avenues for future research in international business.