UNCORRECTED PROOF Journal: JIBS Disk used Despatch Date: 3/3/2008 Article : ppl_jibs_8400377 Pages: 1–17 OP: Raj Gml : Template: Ver 1.0.2 PERSPECTIVE An institution-based view of international business strategy: a focus on emerging economies Mike W Peng 1 , Denis YL Wang 2 and Yi Jiang 3 1 School of Management, University of Texas at Dallas, Richardson, USA; 2 Department of Management, Chinese University of Hong Kong, Shatin, Hong Kong; 3 Department of Management, California State University, Hayward, USA Correspondence: MW Peng, School of Management, University of Texas at Dallas, Box 830688, SM 43, Richardson, TX 75083, USA. Tel: þ 1 972 883 2714; Fax: þ 1 972 883 6029; E-mail: mikepeng@utdallas.edu Advance online publication citations for this journal have the following format: ‘‘Hutzschenreuter, T. & Voll, J. C. 2007. Performance effects of ‘added cultural distance’ in the path of international expansion: the case of German multinational enterprises. Journal of International Business Studies, advance online publication 30 August. doi:10.1057/palgrave.jibs.8400312.’’ Received: 20 December 2004 Revised: 27 February 2007 Accepted: 14 May 2007 Online publication date: KK Abstract Leveraging the recent research interest in emerging economies, this Perspec- tive paper argues that an institution-based view of international business (IB) strategy has emerged. It is positioned as one leg that helps sustain the ‘‘strategy tripod’’ (the other two legs consisting of the industry- and resource-based views). We then review four diverse areas of substantive research: (1) antidumping as entry barriers; (2) competing in and out of India; (3) growing the firm in China; and (4) governing the corporation in emerging economies. Overall, we argue that an institution-based view of IB strategy, in combination with industry- and resource-based views, will not only help sustain a strategy tripod, but also shed significant light on the most fundamental questions confronting IB, such as ‘‘What drives firm strategy and performance in IB?’’ Journal of International Business Studies (2008) 0, 1–17. doi:10.1057/palgrave.jibs.8400377 Keywords: institutions; institution-based view; international business strategy; emer- ging economies INTRODUCTION What drives firm strategy in international business (IB)? What determines the success and failure of firms around the world? These are some of the most fundamental questions confronting the IB field (Peng, 2004a). Traditionally, there are two perspectives that address these two questions. An industry-based view, represented by Porter (1980), argues that conditions within an industry, to a large extent, determine firm strategy and performance. A resource- based view, exemplified by Barney (1991), suggests that it is firm- specific differences that drive strategy and performance. These influential views have been developed primarily in the field of strategic management. While IB and strategy are closely allied fields (Peng, 2006; Ricart, Enright, Ghemawat, Hart, & Khanna, 2004), what are the contributions of IB research that can add to our understanding of the two crucial questions raised earlier? Insightful as the industry- and resource-based views are, they can be criticized for largely ignoring the formal and informal institu- tional underpinning that provides the context of competition among industries and firms studied with these lenses (Kogut, 2003). In other words, they assume institutions as ‘‘background’’. This is not surprising, because industry- and resource-based views Journal of International Business Studies, 1–17 & 2008 Academy of International Business All rights reserved 0047-2506 $30.00 www.jibs.net