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- Title
THE GROWTH OF THE FIRM IN PLANNED ECONOMIES IN TRANSITION: INSTITUTIONS, ORGANIZATIONS, AND STRATEGIC CHOICE.
- Authors
Peng, Mike W.; Heath, Peggy Sue
- Abstract
Highlighting an important facet of diversity among organizations operating in different institutional environments, this article presents a model of the growth strategy of the firm in planned economies in transition such as Eastern Europe, the former Soviet republics, and China. Focusing on the stylized state-owned enterprises, we explore the interaction between institutions and organizations in these countries. Given the institutional constraints, neither generic expansion nor acquisitions, two traditional strategies for growth found in the West, are viable for firms in these countries. Instead, firms settle on a network-based strategy of growth, building on personal trust and informal agreements among managers. The institutional environment that leads to this unique strategy of growth is examined, and boundary conditions, limitations, and implications of this model are discussed.
- Subjects
CORPORATE growth; ORGANIZATIONAL growth; INDUSTRIAL management; STRATEGIC planning; DECISION making; INTERORGANIZATIONAL networks; ORGANIZATIONAL behavior; BUSINESS planning; LOCATION analysis; BUSINESS models
- Publication
Academy of Management Review, 1996, Vol 21, Issue 2, p492
- ISSN
0363-7425
- Publication type
Article
- DOI
10.5465/AMR.1996.9605060220