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The home country’s economic and physical resources

2. National economic and industrial policies

3. Cultural values and institutional norms regarding environmental regulation and business lobbying

• Porter’s perspective on national competitiveness suggests that the economic and regulatory environment of the home country play an important role in shaping corporate capabilities and hence strategies
• Home country economic and resource conditions are unlikely to affect competencies very much in the oil industry because the oil companies can tap their subsidiaries and independent specialist companies for technologies and resources
• In the auto industry, home country conditions are likely to influence corporate strategy more significantly

Firm Specific Factors

• MNEs are likely to respond differently to the climate change issue because of the specificities of their own histories, cultures, and structures
• Firm-level differences in organizational structures and processes also appeared to play a role
• MNEs such as Exxon and Ford tightly controlled their strategic planning from the center, leaving little room for local discretion or dissent
• By comparison, GM was more decentralized

Industry Characteristics

• In terms of institutional theory, the relevant field exerting pressures for conformity is more global than national or regional
• Oil is the archetypal global industry

> it is a commodity with a uniform international price and the major companies tend to adopt global rather than multidomestic strategies

• The auto industry is somewhat more regional in nature, both in terms of supply chain integration and the degree of product differentiation
• There is also a trend toward convergence in the auto industry

> one reason for convergence lies in the nature of the threat posed by climate change to the auto industry

Issue Level factors: Convergence across countries and industries

• Climate change, ozone depletion, and labor standards in developing countries are global issues which exert institutional pressures for convergence on MNEs from different countries and industries
• In the case of climate change, participation in industry associations and a multitude of negotiation sessions have provided arenas within which expectations concerning science, policy, markets, and technologies tended to converge
• In addition to negotiations and conferences, the dense institutional infrastructure established by industry has tended to encourage convergent views and attitudes

Conclusion

• Institutional environment plays an important role in influencing corporate strategies
• Divergent pressures initially tended to predominate, as home country context and individual corporate experiences influenced initial corporate reactions to this emerging environmental issue
• Convergent pressures tended to increase as the issue matured
• Over a period of time, a more sophisticated understanding of the science emerged and mechanisms for regulating emissions, monitoring, and enforcement became institutionalized
• As the companies became more aware of their competitors’ responses and more enmeshed in issue specific international regulatory and scientific institutions, they began t coordinate their responses to the issue within national and cross-national industry associations and issue-specific working groups
• As a result of frequent interactions in these institutional environments, the companies have developed similar outlooks on markets and technologies
• Strategic responses were thus driven less by accumulated technological competencies and more by the institutionalized memory of losses associated with prior investments
• MNEs need to develop strategy based on broad set of inputs gained from interactions with subsidiaries, industry associations, and NGOs

The home country’s economic and physical resources

2. National economic and industrial policies

3. Cultural values and institutional norms regarding environmental regulation and business lobbying

• Porter’s perspective on national competitiveness suggests that the economic and regulatory environment of the home country play an important role in shaping corporate capabilities and hence strategies
• Home country economic and resource conditions are unlikely to affect competencies very much in the oil industry because the oil companies can tap their subsidiaries and independent specialist companies for technologies and resources
• In the auto industry, home country conditions are likely to influence corporate strategy more significantly

Firm Specific Factors

• MNEs are likely to respond differently to the climate change issue because of the specificities of their own histories, cultures, and structures
• Firm-level differences in organizational structures and processes also appeared to play a role
• MNEs such as Exxon and Ford tightly controlled their strategic planning from the center, leaving little room for local discretion or dissent
• By comparison, GM was more decentralized

Industry Characteristics

• In terms of institutional theory, the relevant field exerting pressures for conformity is more global than national or regional
• Oil is the archetypal global industry

> it is a commodity with a uniform international price and the major companies tend to adopt global rather than multidomestic strategies

• The auto industry is somewhat more regional in nature, both in terms of supply chain integration and the degree of product differentiation
• There is also a trend toward convergence in the auto industry

> one reason for convergence lies in the nature of the threat posed by climate change to the auto industry

Issue Level factors: Convergence across countries and industries

• Climate change, ozone depletion, and labor standards in developing countries are global issues which exert institutional pressures for convergence on MNEs from different countries and industries
• In the case of climate change, participation in industry associations and a multitude of negotiation sessions have provided arenas within which expectations concerning science, policy, markets, and technologies tended to converge
• In addition to negotiations and conferences, the dense institutional infrastructure established by industry has tended to encourage convergent views and attitudes

Conclusion

• Institutional environment plays an important role in influencing corporate strategies
• Divergent pressures initially tended to predominate, as home country context and individual corporate experiences influenced initial corporate reactions to this emerging environmental issue
• Convergent pressures tended to increase as the issue matured
• Over a period of time, a more sophisticated understanding of the science emerged and mechanisms for regulating emissions, monitoring, and enforcement became institutionalized
• As the companies became more aware of their competitors’ responses and more enmeshed in issue specific international regulatory and scientific institutions, they began t coordinate their responses to the issue within national and cross-national industry associations and issue-specific working groups
• As a result of frequent interactions in these institutional environments, the companies have developed similar outlooks on markets and technologies
• Strategic responses were thus driven less by accumulated technological competencies and more by the institutionalized memory of losses associated with prior investments
• MNEs need to develop strategy based on broad set of inputs gained from interactions with subsidiaries, industry associations, and NGOs

General points of the essay

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