The objective of this workshop is to discuss how formal institutions (contracts, incentives, authority) and informal institutions (norms, routines, political processes) interact and influence the governance of exchanges within and between firms. The joint analysis of formal and informal institutions has been embraced by scholars as a way to refine and improve existing theories of economic organization. We will highlight, in particular, three potential areas of research exploring the interplay between formal and informal institutions: first, whether formal institutions support (complement) or undermine (substitute for) the contributions of informal institutions; second, how vacillation in formal organizational modes allows managers to efficiently alter the trajectory of informal institutions; and third, how certain informal institutions influence the boundaries of the firm.

Emerging economies are often associated with a host of limitations including weak legal protection, corruption, poor infrastructure, and uneven income distribution. Scholars have recently proposed that this distinct environment mandates business strategies that substantially differ from those commonly adopted by firms established in developed countries. This workshop will discuss recent research in this field, covering topics such as the emergence of business groups, the value of political connections, and the effect of governmental (industrial) policy on the creation of firm-level competitive advantage.

Required reading (must-read)

• Khanna, T., & Yafeh, Y. 2007. Business groups in emerging markets: paragons or parasites? Journal of Economic Literature, 45: 331-372.
  Can be downloaded at http://ssrn.com/abstract=787625

Complementary readings

• Fisman, R. 2001. Estimating the value of political connections. American Economic Review, 91(4): 1095-1102.
  Can be downloaded at http://ideas.repec.org/a/aea/aecrev/v91y2001i4p1095-1102.html
• Lazzarini, S. G., & Musacchio, A. 2010. Leviathan as a minority shareholder: a study of equity purchases by the Brazilian National Development Bank (BNDES), 1995-2003. Working paper, Insper Institute of Education and Research.
  Can be downloaded at http://ssrn.com/abstract=1713429
• Mesquita, L., & Lazzarini, S. G. 2008. Horizontal and vertical relationships in developing economies: implications for SMEs' access to global markets. Academy of Management Journal, 51(2): 359-380.