Institutional change and stability in strategic networks in the Brazilian pharmaceutical industry

Abstract

Purpose This study aims to analyze the dynamics of the institutional change and institutional stability undergone by strategic networks (SNs) in the pharmaceutical industry. Design/methodology/approach The authors performed a case study with four Brazilian SNs which followed different patterns of institutional change and institutional stability. Twenty network managers and network members from the pharmaceutical industry were interviewed, and documents were analyzed. Findings The results show how and why institutions changed or remained the same. More specifically, exogenous shocks can negatively impact the competitive environment influencing institutional change in SNs. Moreover, endogenous shocks may prevent institutional change and stimulate institutional stability. Continuous interaction between institutions and SNs is the key to institutional change, especially if public and private policies are considered a source of political institutions. Originality/value Research has highlighted the endogenous influence of SNs on firms in selecting their partners and arranging their positions in the SNs, but little attention has been paid to how SNs themselves respond to institutions or promote institutional change. This study explains how and why change fails at the network level, additionally pinpointing the main sources of the institutional change and inertia in SNs. As such, network members may use different strategies to stimulate institutional change or stability according to their interests.