International Journal of Business and Social Science

ISSN 2219-1933 (Print), 2219-6021 (Online) DOI: 10.30845/ijbss

The Impact of Formal Institutions on Global Strategy in Developed vs. Emerging Economies
Hannah Beyer, Dr. Fred Fening

This article attempts to investigate the impact of formal institutions in developed and emerging economies on the global strategy of firms. The different institutional environments are influential on the development of a global strategy. Adjustment of the strategy is relevant for the success in international markets. First, the difference in the institutional environment of developed and emerging economies is analyzed. The two markets are compared using three distinct institutions: Business Regulations, Trade Barriers, and Property Rights. To provide a better understanding of the differences, specific information is given on Germany as a developed economy and India as an emerging economy. Second, the impact of the differences on the global strategy of firms is discussed. The results show that countries with weak institutions, as found in emerging economies, require a different global strategy compared to countries with strong institutions, as found in developed economies.

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