The Interrelationships Among Informal Institutions, Formal Institutions, and Inward Foreign Direct Investment

Journal of Management, Forthcoming

38 Pages Posted: 31 Jan 2012

See all articles by R. Michael Holmes

R. Michael Holmes

Florida State University - Department of Management

Toyah Miller

Indiana University - Kelley School of Business - Management & Entrepreneurship

Michael A. Hitt

Texas A&M University - Department of Management; Texas Christian University

M. Paz Salmador

Universidad Autónoma de Madrid

Date Written: January 28, 2012

Abstract

This research contributes to institutional theory by examining the influence of informal institutions on formal institutions and the effects of formal institutions on inward foreign direct investment. In particular, the authors integrate prior research from multiple disciplines to identify and to examine the roles of a country’s formal regulatory, political, and economic institutions. The results suggest that the country’s informal institutions, in the form of the cultural dimensions of collectivism and future orientation, shape the country’s formal institutions. In turn, each of the three formal institutions affects the country’s level of inward foreign direct investment differently. To facilitate future research, the authors also provide a set of measures for formal institutions in 50 countries.

Keywords: institutional theory, formal and informal institutions, foreign direct investment, construct validity, internationalization

Suggested Citation

Holmes, R. Michael and Miller, Toyah and Hitt, Michael A. and Salmador, M. Paz, The Interrelationships Among Informal Institutions, Formal Institutions, and Inward Foreign Direct Investment (January 28, 2012). Journal of Management, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1994477

R. Michael Holmes (Contact Author)

Florida State University - Department of Management ( email )

United States

Toyah Miller

Indiana University - Kelley School of Business - Management & Entrepreneurship ( email )

Bloomington, IN 47405
United States

Michael A. Hitt

Texas A&M University - Department of Management ( email )

430 Wehner
College Station, TX 77843-4218
United States
979-458-3393 (Phone)

Texas Christian University ( email )

Fort Worth, TX 76129
United States

M. Paz Salmador

Universidad Autónoma de Madrid ( email )

Campus Cantoblanco
C/Kelsen, 1
Madrid, Madrid 28049
Spain

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