Institutional Complementarity as the Space for Strategic Preferences



The implications of diverse institutional demands for strategic initiatives have only recently attracted attention in the Comparative Capitalism (CC) literature. In spite of the proliferation of actor-centred explanations within CC, the recognition that institutional diversity opens up avenues for creative recombination tends to remain at the national level. We aim to introduce more dynamism into the CC literature at the micro level by examining how strategic initiatives of organisations are affected by diverse institutional pressures. Focusing on the MNE context, we find that German and UK subsidiaries of MNEs of Dutch and UK origin show differences in their ability to initiate new practices based on the extent to which the host context supports labour inputs and organisational conditions—employee relations and leadership style—facilitate change efforts. Our findings also highlight that the ability of subsidiaries to sustain these practices depends on the structure of the MNE. This suggests that, in contrast to the debates on the institutional diversity-change link in the CC literature, it is institutional complementarity that is influential in the transfer of practices. Moreover, the initiation of new practices requires MNE structures to be aligned with host context demands for them to be sustained.