Institutional Voids, Economic Adversity and Inter‐firm Cooperation in an Emerging Market: The Mediating Role of Government R&D Support
| Author | Catherine Robinson,Zaheer Khan,Yaw A. Debrah,Samuel Adomako,Joseph Amankwah‐Amoah,Irene Chu |
| DOI | http://doi.org/10.1111/1467-8551.12443 |
| Published date | 01 January 2021 |
| Date | 01 January 2021 |
British Journal of Management, Vol. 32, 40–58 (2021)
DOI: 10.1111/1467-8551.12443
Institutional Voids, Economic Adversity and
Inter-rm Cooperation in an Emerging
Market: The Mediating Role of Government
R&D Support
Samuel Adomako ,1Joseph Amankwah-Amoah ,2Yaw A . Deb rah ,3
Zaheer Khan ,4Irene Chu1and Catherine Robinson2
1School of Management, University of Bradford, Bradford, BD7 1DP, UK, 2Kent Business School, University
of Kent, Canterbury, CT2 7NZ, UK, 3School of Management, Swansea University, Swansea, SA2 8PP, UK,
and 4King’s College, University of Aberdeen Business School, The University of Aberdeen, Aberdeen, AB24
3FX, UK
Corresponding author email: j.amankwah-amoah@kent.ac.uk
This paper examines the mediating mechanism of the relationship between institutional
voids (IVs) and inter-rm cooperation and the moderating role of economic adversity in
the context of small and medium-sized enterprises (SMEs) based in emerging markets.
The hypotheses are tested using time-lagged survey data from214 SMEs in Ghana. The
ndings provide support for the hypotheses by showing that: (1) IVs positively inuence
the use of government research and development (R&D) support; (2) the use of govern-
ment R&D support mediates the relationship between IVs and inter-rm cooperation;
and (3) economic adversity positivelymoderates the relationship between IVs and the use
of government R&D support. The ndings contribute to understanding the role of IVs in
inter-rm cooperation. The wider implications for theory and practice are examined.
Introduction
The varying institutional environments across
different markets exert a signicant inuence
on rms’ behaviour and their strategic choices
(Doh et al., 2017; Townsend and Hart, 2008),
including inter-rm cooperation and strategic
alliances. However, the differences in the national
supportiveness and quality of the institutional
environment remain a source of uncertainty for
rms (Tobias, Mair and Barbosa-Leiker, 2013).
This is especially the case for rms based in less de-
veloped and unstable institutional environments,
such as those in developing economies (see Bruton,
Ketchen and Ireland, 2013). Emerging marketsare
characterized by bureaucracy, poor enforcement
capacity of state ofcials, lack of reliable market
information, poor intermediary institutions and
unpredictable government actions (Doh et al.,
2017; Hoskisson et al., 2000; Khanna and Palepu,
1997; Khanna and Rivkin, 2001; Peng and Heath,
1996). As such, emerging markets are character-
ized by a high degree of institutional voids (IVs),
which occur when ‘institutional arrangements that
support markets are weak, or fail to accomplish
the role expected of them’ (Mair and Marti, 2009,
p. 422). Such voids inuence rms’ ability to ex-
ploit and explore market opportunities (Acquaah,
2007; Khanna and Palepu, 2000a, 2000b, 2010).
For example, past research demonstrates that
IVs, such as regulatory uncertainties and lack
of or weak market-supporting mechanisms, can
manifest in restricting rms’ access to nancial re-
sources (Khanna and Palepu, 1999), limiting some
© 2020 British Academy of Management and Wiley Periodicals LLC. Published by JohnWiley & Sons Ltd, 9600 Gars-
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Institutional Voids in Inter-rm Cooperation 41
rms’ ability to cultivate ties for effective coop-
eration (Amankwah-Amoah and Debrah, 2017),
which in turn hinders innovation and the develop-
ment of competitive advantage (Castellacci, 2015).
Past studies have demonstrated that institu-
tions directly shape rm behaviour (Ingram and
Silverman, 2002; Marquis and Raynard, 2015;
Meyer et al., 2009). Generally, rms operating in
emerging markets develop a variety of compen-
sating mechanisms such as inter-rm cooperation
(Kundu, Munjal and Lahiri, 2020) to optimize re-
sources, share risks and createnew sources of mar-
ket/competitive advantage, especially in situations
that a single rm cannot tackle on its own. Os-
tensibly, when formal institutions are weak, rms
tend to utilize substitute channels for formal in-
stitutional support (Ge, Carney and Kellermanns,
2019; Khanna and Palepu, 2006). In particular,
rms adopt network-based strategies, such as in-
formal ties, alliances, consortia, cross-sector part-
nerships and relational governance mechanisms
(Khanna and Palepu, 2000a; Mair, Martí and
Ventresca, 2012) to facilitate economic exchanges
(Peng and Luo, 2000). Firms based in emerg-
ing markets can overcome institutional challenges
by forming inter-rm alliances and networks of
relationships (Khan, Rao-Nicholson and Tarba,
2018).
The prevalence of institutional constraints
across emerging and developing markets has
forced organizations to forge and tighten rela-
tionships through different, cooperative ties as a
means of leveraging resources and complemen-
tary capabilities to develop a competitive advan-
tage (Khan, Rao-Nicholson and Tarba, 2018).
For example, the strategic-choice literature sug-
gests that managerial decision-making takes ac-
count of the organizational environment (Child,
1972; McCarthy et al., 2010). Arguably, inter-rm
cooperation is often such a strategic choice. How-
ever, the extant literature has not yet explored
how IVs drive this decision-making and the un-
derlying mediating and moderatingfactors leading
to the formation of inter-rm cooperation. Thus,
these issues remain underexplored (Castañer and
Oliveira, 2020; Gulati, 1998). Inter-rm coopera-
tion may be viewed as vital for emerging-market
rms due to the presence of weak formal institu-
tions (Ahuja and Yayavaram, 2011; Hiatt and Sine,
2014; Peng et al., 2009), as through such arrange-
ments rms can have access to complementary re-
sources and capabilities(Diestre and Rajagopalan,
2012; Gnyawali and Madhavan, 2001). Such ac-
cess is extremely important for small and medium-
sized enterprises (SMEs) in particular, since they
are likelyto lack a comprehensive internal resource
base (Mesquita and Lazzarini, 2008).
Despite the progress made towards understand-
ing the inuence of IVs in driving rm behaviour
and strategies, the extant literature exhibits some
key research gaps. For instance, while efforts to
explain the antecedents and consequences of IVs
have blossomed, it remains unclear how IVs re-
late to inter-rm cooperation and the underly-
ing mechanisms through which IVs may inu-
ence inter-rm cooperation. More importantly,
our study is further motivated by the limited stud-
ies focusing on how IVs drive SMEs, in partic-
ular those that are based in emerging markets,
to engage in inter-rm cooperative engagements.
Such inter-rm cooperation tends to be ‘voluntary
arrangements between rms involving exchange,
sharing, or co-development of products, technolo-
gies, or services’ (Gulati, 1998, p. 293). Thus, the
main purpose of this paper is to examine the effects
of IVs on inter-rm cooperation and to clarify the
boundary conditions of this potential association.
The present paper contributes to the broader
international business and strategy literature in
three important ways. First, it integrates ideas from
the literature on inter-rm cooperation (Alter and
Hage, 1993; De Faria, Lima and Santos, 2010;
Gulati, 1998; Phillips, Lawrence and Hardy, 2000;
Un, Cuervo-Cazurra and Asakawa,2010) with the
IVs’ perspective (Hoskisson et al., 2000; Khanna
and Palepu, 1997, 2000a, 2000b; Peng and Heath,
1996) in order to investigate the effect of IVs on
inter-rm cooperation. In doing so, this paper ex-
tends Phillips, Lawrence and Hardy’s (2000) study
by empirically testing the relationship betweenIVs
and rms’ collaborative practices. Particularly, this
paper focuses on the impact of IVs as an im-
pelling force for inter-rm cooperation and high-
lights rms’ responses to IVs in emerging markets
(cf. Doh et al., 2017).
Second, this paper explores the mediatingmech-
anisms on the relationship between IVs and inter-
rm cooperation. In this way, the paper shows
how the use of government research and devel-
opment (R&D) support (participation of rms in
government-funded R&D projects) mediates the
hypothesized indirect link between IVs and inter-
rm cooperation. Such a nuanced analysis is war-
ranted because it sheds light on the ways in which
© 2020 British Academy of Management and Wiley Periodicals LLC.
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