Institutional complexity and the strategic behaviors of SMEs in transitional environments

• Ding, Yuan 
• Malleret, Véronique 
• Velamuri, S. Ramakrishna 

Indexed by

Scopus ESCI ABDC-C

Abstract

Purpose
The　purpose　of　this　paper　is　to　contribute　to　the　literature　on　institutional　complexity　by　highlighting　patterns　of　strategic　behaviors　of　SMEs　in　institutional　environments　undergoing　large　scale　transitions.

Design/methodology/approach
The　paper　uses　five　in-depth　case　studies　of　medium-sized　enterprises　in　the　Yangtze　River　Delta　region　to　study　their　behaviors　over　the　2000-2012　period　during　which　the　institutional　landscape　in　China　underwent　major　changes.

Findings
The　authors　find　that　when　institutional　complexity　is　high,　i.e.,　when　neither　the　planned　economy　nor　the　market　economy　logic　dominates,　the　role　of　organizational　filters　is　more　pronounced.　In　this　situation,　firm-level　characteristics　–　its　revenues　and　profitability,　its　competitive　position　and　future　prospects　–　play　a　dominant　role　in　determining　the　nature　of　the　strategic　decisions　and　actions　the　firm　undertakes.

Research　limitations/implications
The　findings　provide　a　nuanced　perspective　on　strategic　behaviors　under　institutional　complexity.　The　qualitative　research　design　offers　rich　insights　but　limited　generalizability.

Practical　implications
The　findings　offer　practical　insights　to　SME　leaders　in　terms　of　exercising　caution　in　undertaking　unrelated　diversification　during　periods　of　transition　from　planned　to　market　economies.

Originality/value
The　authors　apply　the　concepts　of　institutional　complexity　and　organizational　filters　in　a　context　of　large　scale　institutional　transitions　to　study　the　strategic　behaviors　of　SMEs　over　a　12　year　period.

Keyword

• Institutional complexity
• Institutional logics
• SMEs
• Strategic behaviour
• Transition economies

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