Thriving in a weak institutional environment: strategies for engaging with regulative institutions

PurposeThis paper explores how a firm that is established in an environment characterized by uncertainty can engage with weak regulative institutions by developing operational and institutional capabilities.Design/methodology/approachWe employ a multiple case study approach with seven leading multinational firms in Brazil in industries that vary in industry concentration.FindingsFirms choose among alternative strategies for engaging with regulative institutions as an ongoing process, based on their assessment of four characteristics of the uncertainty they face and their capabilities. Strategies that require a firm to exert greater effort to adapt to institutions or influence institutions have a greater potential to catalyze for developing operational capabilities. Although firms in industries with different concentrations behave similarly in individually adapting to regulative institutions, firms in decentralized industries are more likely to collaborate to influence institutions, which enables them to both access public agents through network partners and better negotiate their own interests.Practical implicationsThis research guides managers in developing institutional engagement strategies to reduce the potential consequences of institutional uncertainty in their supply chain. It also suggests types of institutional capability aligned with decentralized vs concentrated industries.Originality/valueWe extend the construct of institutional engagement strategies from the context of entrance to a new international market to an ongoing process in firms that are established in an environment characterized by weak regulative institutions. We also examine the role of industry concentration in the application of institutional engagement strategies.