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Institutional Bridging for SME High-distance Internationalisation to China

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View the page of Carole Couper

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Carole Couper offers a contextualised explanation of the process of institutional bridging by Delta, a British SME, in order to internationalise to China across high institutional distance.

Image courtesy of interviewee. July 22, 2024

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This video discusses research examining how small and medium-sized enterprises (SMEs) internationalize in the context of globalization and the emergence of high-distance markets, particularly focusing on challenges faced when entering markets like China. Historically, SMEs primarily traded with neighboring countries, but globalization has pushed them to explore further afield, often without the necessary resources or networks.

The research highlights that SMEs require "institutional bridging" to successfully navigate different legal and business practices in foreign markets. The author points out a gap in existing literature regarding how these firms can develop capabilities for such bridging amidst their constraints.

Using a case study of a Scottish engineering SME, Delta, which successfully transitioned to manufacturing in China under pressure from its main customer, the research identifies key mechanisms that facilitated their successful internationalization. These mechanisms include:

1. **Institutional Dissonance Mitigation**: The company’s managing director, drawing from past experiences in India, recognized the potential conflicts between UK and Chinese business practices. This video awareness guided the company to choose a representative who understood both cultures.

2. **Strategic Multi-level Embedding**: This video involved strengthening relationships and trust-building between the UK headquarters and the new Chinese representative. The firm emphasized cultural integration and bonding before sending the representative to China.

3. **Combination of Mechanisms**: The success of the institutional bridging process was attributed to the interplay of these mechanisms rather than their standalone implementation.

The research introduces new concepts such as "institutional dissonance," which describes the mismatched expectations between two different institutional contexts, and "institutional consonance," referring to the adaptation necessary to synchronize business practices across diverse environments.

Overall, the study aims to provide deeper insights into the processes and mechanisms that SMEs can leverage for successful internationalization into high-distance markets, thus contributing to the literature on institutional bridging in the context of SMEs.

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X-TIMESTAMP-MAP:LOCAL=00:00:00.000,MPEGTS=900000

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The context of the research was the, the fact that,

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with globalization

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and, kind of a, an increase in trade across,

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across the world from the, the early 1990s,

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many SMEs were, were suddenly, starting

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to internationalize to what I describe

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as high distance markets.

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So what that means is, in the past they might have,

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traded or, or internationalized

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with countries closer to home.

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But because of the, the emergence of emerging markets,

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globalization, large ES had done

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that, type of, of trade

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and internationalization,

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activities for quite a long time.

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But for SMEs, it was quite new.

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Um, and my past experience as a practitioner, I was,

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I worked in international business in industry,

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had made me observe

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and notice quite a lot of,

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challenges when it came to, to SMEs.

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So for, for SMEs which are small

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and media enterprise, to internationalize to,

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to distant market, to markets,

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were quite far away from home.

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Very, very different for these firms

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to intentionalize, to those markets.

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There's a lot of challenges involved

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because those firms are resource constraints.

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They're also network constraints.

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So very often the network will not span

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such such long distance.

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Um, so what the lit literature identified was

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that, those firms needed to develop,

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what they describe as institutional bridging,

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which is a type of, of process in order

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to internationalize far away from home.

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Um, however, what the literature did not really explain was

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how was that possible?

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Because there was a bit of a paradox involved.

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Uh, those firms had to develop this capability

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of institutional bridging.

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So, so creating a bridge from their home market to the,

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the distant horse market,

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which often in involved a lot of, of highly,

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different type of environments, you know,

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institutional environments.

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So for example, the regulatory

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and legal framework are often extremely different.

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If you're internationalizing with Europe, you tend to find

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that the institutional framework from a regulatory

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perspective and and legal perspective is kind of similar.

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If you start looking at emerging market like China

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and India, obviously the institutional market is,

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is much more, divergent, you know, different.

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So that was one of the issues.

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The other issues is very often SMEs like, knowledge,

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so it can be linguistic,

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what we describe in institutional theory as cultural,

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cognitive, institutions.

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So very often they didn't understand or speak the languages.

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Uh, and I looked at China, which was,

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spec particularly challenging.

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Uh, they don't understand the normative,

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institution either.

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So for example, the type of business practices,

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the expectations that, Chinese firms and, and,

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and, executive might have of what is acceptable

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or not, in terms of, of doing business.

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And very often those practices may conflict

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with UK based practices.

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And I'll come back on that.

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When we look at the, the findings,

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when we talk about the, the mechanisms.

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So because of those challenges,

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because of the lack of resources that SMEs have compared

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to large multinationals, for example,

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and the lack of network, the,

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the literature was highlighting the need

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to develop this capability of institutional bridging.

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But it's easier said than done.

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And the, the literature did not explain

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how exactly would this, this resource constraint

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and network constrained firms managed

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to develop that capability.

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From my experience as well, I knew

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that many SMEs in the early 1990s

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and mid 1990s when I was working as a practitioner,

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would develop networks with, with China

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as a emerging market.

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Um, but within a few years, they suddenly would have

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what I would describe as test catastrophic network collapse,

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where everything looked okay, you know,

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things were going great as far as the,

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the UK SME was concerned,

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but it suddenly things were completely collapse,

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and it did not see it coming,

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and they did not understand why.

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And for those type of firms, which are again,

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resource constrained, this was catastrophic

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because very often it might mean those firms would go

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bankrupt or, or really have wasted a lot of time

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and effort, trying

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to develop their international activities with the market

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to find all their hopes really crushed.

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So I had noticed this,

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but I also noticed that there were some examples of firms,

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and this comes to why it shows that particular, case

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that were surprisingly and remarkably successful.

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And it was really difficult to understand what,

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what made this firm unusually successful when

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so many others failed.

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So this is what sparked my, my interest.

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And when I joined academia, I, decided to,

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for my doctoral thesis to kind

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of look into that, that phenomenon.

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So Delta was a, British actually based in Scotland type

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of firm, very traditional firm from, you know,

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set up in the 19th century.

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Uh, so very long history engineering products.

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And they, around 2006, they found themselves,

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at a crossroad because things were not going well.

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Uh, their performance was, was really, problematic.

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They were actually, really, really struggling.

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And the largest m

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and e customer, approached them and said,

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Right, either you move your manufacturing to China,

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or we will stop working with you.

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And that would've meant bankruptcy for, for the SME.

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So from that situation of really, really challenging,

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performance situation, by the time I finished interviewing

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and, and followed that, that process in, in 2014,

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finished interviewing that firm,

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they were extremely successful.

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So what they did by, linking, you know, bring,

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bringing their, their business part of their business

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to China, really changed their,

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their performance completely.

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So I chose that particular firm.

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And the other thing I did as well in terms of the case is I,

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because I was looking at institutional bridging, involving,

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you know, building a bridge, a network bridge

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between the home country to the host market, emerging market

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of, of China,

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because I was interested in, in high distance,

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obviously China, UK are two kind of markets separated by,

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by high institutional distance.

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But also I wanted to make sure that I,

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was able to interview people on both side of the bridge,

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so not just the UK perspective,

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but get also the, the China perspective.

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And I was able to, to do this with that particular firm.

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So the way I kind

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of looked at this is I thought about institutional

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capability as what kind of process is that?

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What does that look like? If we are looking at it on,

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in terms of process, as in how do you start from stage one,

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stage two and add, you know, how do does that evolve?

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What does that look like?

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And what I wanted to identify were mechanisms that explain.

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So I wanted to explain the phenomenon.

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So I wanted to identify mechanisms that could explain

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how this process was done successfully.

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So I choose that particularly successful case of, of Delta,

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and by taking what we call a, a,

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a critical realist approach, which where you are looking at,

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the phenomenon from, a multiple dimensions.

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So the critical realist approach I follow is, is linked

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to a, a philosopher called Baskar.

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And he talks about critical realisms as the empirical,

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which is the experience that pe that individual have of,

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of particular, event.

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Then he talks about the, actual,

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which are the events themselves.

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So if you think about a process, you'll have a number

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of events along that process that cannot take place.

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And this is, the events are what, Baskar described

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as the actual, and then what the critical realist,

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ontology of philosophy argues is that

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these events can be explained,

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but certain type of, of conditions and structures and, and,

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and condition and contextual type of factors,

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which are the mechanisms under the underneath.

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And this is described as the real.

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So you have those three kind of levels, three dimension.

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Um, and in order to understand the real, you have to start

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through interview at the level of the, the experience

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of the individual of events.

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Then you have to trace the process

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by looking at different events.

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Um, and then you have to ask certain types of questions

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that allows you to probe

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and dig deeper into the reasons why certain events

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happened and why that event then led to that other event.

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So you, you would look not just at what happened,

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but what are the alternative

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that could have happened and did not.

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So you would ask questions to people about why did you make

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that decision of, for example,

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choosing this particular individual

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as your representative in China,

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and the person would explain,

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and then you would have to probe deeper and, and,

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and work out what exactly it is about this individual

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attributes that meant that this was the right person.

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So what if the individual was not Chinese, for example,

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because they chose somebody who was Chinese.

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So what your was not Chinese, what would that change?

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And how does that explain?

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So it's a bit of an abductive way of,

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of looking at the, the phenomenon.

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Well, getting into the, the findings,

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I then, divided the, the process

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into three key bridging stages.

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So the first one was you had that SME, uk, SME,

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and they were kind of nearly forced

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to internationalize to China.

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It wasn't necessarily the decision. They had no choice.

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Um, so that was one, one of the, the context,

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and they had no network.

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So the, the reason that was an interesting SME as well is

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because of their absence of knowledge about China

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and network with China, they had

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to really start from scratch.

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So the, the way they approached this is, first they had

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to build a bridge, and

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because of certain type of, of circumstances, they,

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the bridge building event number one, in a very,

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very particular kind of way.

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So those conditions, one where the fact that the MD

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of the company had prior experience of high distance market

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with India, and they had had extremely challenging time

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in India, they had failed.

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So he thought he knew, he was aware of what I called,

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the, institutional dissonance.

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So institutional dissonance is the kind

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of disharmony you might have between two separate markets.

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So a little bit like when you're listening to a piece

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of music that's not kind of, working very well, the,

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the dissonance is because there are differences that create,

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challenges, conflict between the framework in,

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in the UK and the framework

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In China. And, and

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it was around the disarm

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between the two, the two markets.

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So because of that awareness, that was kind of one

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of really important conditions, is that awareness

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of the challenges led him to understand

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that he needed a particular type of representative,

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which I describe as an institutional hybrid.

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So somebody who had knowledge of both

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the institutional framework of the UK

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and the institutional framework of China.

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So by being hybrid is

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because they can operate across both type of, of networks

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and in order to achieve this.

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So, so many, many small firms would've gone to China,

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would've got help from, you know, the equivalent

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of UKTI at the time to try

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and identify your representative,

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through existing network.

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But this md, because of that awareness of the challenge

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and the institutional dissonance, decided to actually

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select a Chinese MBA student in the uk.

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So we approach a university within very,

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quite close in Scotland, quite close to where the, the,

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the firm is, is based.

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And he interviewed, Chinese MBA students

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who had studied in the uk

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because he thought was that these people,

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one would have a really good, understanding of,

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of the environment in the UK as well

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as the Chinese environment,

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but also their English language might be

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quite, quite good.

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So you approach, this is selected,

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this particular individual we recruited.

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So one of the, the mechanisms, is this kind of,

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institutional dissonance mitigation, which means that the,

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the awareness of the dissonance led the MD to choose someone

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that he thought could mitigate some of these issues,

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but that that wasn't enough.

13:43.665 --> 13:48.605
Um, because he also realized that in order to,

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strengthen the network bridge, he also had

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to maintain the relationship over long,

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longer period of time.

13:57.505 --> 14:00.285
So the author mechanism that came into play and,

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and those three mechanism that I identified have

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to be thought about in combination,

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they don't operate on their own.

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They, they work because they work in combination

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to explain the, the process of constitutional bridging.

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What you realize as well is to, reinforce, so

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that's what I called about.

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The, the, even two was the reinforcement of the,

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the process of institutional bridging

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in order to reinforce.

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He has, he also had to ensure that that,

14:32.715 --> 14:35.525
institutional hybrid, the person on the other side

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of the bridge eventually in China, that

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that institutional hybrid,

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would also be strategically embedded within

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the organization, within the, British,

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institutional framework as well.

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And through a, a form

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of bonding mechanisms as well within them.

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So what I describe as a mechanism of

15:00.045 --> 15:02.965
strategic multilevel embedding is the fact

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that it worked strategically

15:04.405 --> 15:07.325
and very, very hard at one building trust

15:07.345 --> 15:09.725
and bonding with that institutional library

15:10.025 --> 15:13.725
before that person was even, sent to China.

15:14.465 --> 15:17.765
So that, that, that institutional Chinese institutional

15:17.765 --> 15:20.565
library worked within the organization in the UK

15:21.145 --> 15:24.285
for six months, where it was also socialized

15:24.285 --> 15:28.125
to the organizational culture of the, of the firm.

15:28.305 --> 15:32.965
So products expectations as well as further socialize

15:32.985 --> 15:35.445
to the institutional framework of the uk

15:35.795 --> 15:37.525
what is acceptable, what is not.

15:37.945 --> 15:40.965
So it was at, that's why I call it multi-level strategic

15:40.965 --> 15:43.405
embedding, because it was at the level of the individual,

15:43.665 --> 15:46.125
the bonding, the organizational, the firm,

15:46.345 --> 15:49.245
organizational culture products and so on.

15:49.905 --> 15:54.445
And also at the level of the, the nation, the country,

15:54.825 --> 15:58.565
the institutional framework of, the reg, the kind

15:58.565 --> 16:02.885
of regulatory normative, expectations as well,

16:02.915 --> 16:05.285
because there's a lot of conflict between

16:06.075 --> 16:08.325
what would be accepted in, in China versus

16:08.715 --> 16:11.445
what would be accepted in acceptable in the uk from a

16:11.605 --> 16:13.685
business perspective, there's very different ways of,

16:14.025 --> 16:15.125
of doing business.

16:15.705 --> 16:18.645
So that was the second mechanism that kind of helped

16:18.645 --> 16:20.925
with the first one together, explain

16:21.185 --> 16:22.805
how they reinforce that bridge.

16:23.105 --> 16:25.045
And for an ME this is really important

16:25.045 --> 16:29.445
because the usual way to protect yourself against

16:30.005 --> 16:33.165
opportunistic behavior and opportunism is through, kind

16:33.165 --> 16:35.725
of legal contract type of enforcement.

16:36.185 --> 16:37.205
But there's two problems.

16:37.345 --> 16:40.285
One, for an SME, the resource constraint means

16:40.285 --> 16:42.285
that you do not always have the resources

16:42.385 --> 16:45.685
to ensure you can enforce the contract if you have to go

16:45.685 --> 16:49.005
to court, for example, plus in the context

16:49.145 --> 16:51.405
of a very high distance market like China.

16:52.625 --> 16:55.245
The, the second, issue is that

16:55.245 --> 16:59.085
because you, you have a very different legal framework in

16:59.085 --> 17:03.205
China, you don't have this kind of rule of law, system.

17:03.865 --> 17:06.805
The chance of getting a, a legal contract enforce

17:06.985 --> 17:10.565
as a foreign entity is also a bit of a challenge.

17:10.905 --> 17:14.565
So from an SME perspective, the legal contract was important

17:14.705 --> 17:16.005
as part of the discussion

17:16.185 --> 17:18.245
and understanding, setting things up,

17:18.625 --> 17:19.845
having those discussion.

17:19.845 --> 17:22.365
But when it came to enforcement of those contracts,

17:22.465 --> 17:24.165
it would've been very, very difficult.

17:24.625 --> 17:27.205
So they knew that to protect themselves against any

17:27.205 --> 17:30.445
potential opportunistic behavior, they also needed

17:30.505 --> 17:34.605
to reinforce, to embed this future representative,

17:34.915 --> 17:37.525
this institutional hybrid, at the,

17:37.525 --> 17:38.645
at those kind of three levels.

17:39.145 --> 17:40.845
And they were extremely successful,

17:40.845 --> 17:43.205
and they went to incredible land to achieve this.

17:43.745 --> 17:46.485
One of the example that I strongly remember

17:47.065 --> 17:48.845
is the, the firm invited,

17:49.025 --> 17:52.245
For example, their, their new recruits, parents

17:52.465 --> 17:53.685
who were Chinese teachers,

17:54.225 --> 17:55.885
and they inviting them to come over,

17:56.475 --> 17:57.885
they took them across the uk.

17:57.885 --> 17:59.525
They were English teachers in China,

17:59.625 --> 18:01.085
so they took them across the uk.

18:01.085 --> 18:02.845
They went to start Aven.

18:03.345 --> 18:05.445
Uh, they really build a very,

18:05.635 --> 18:09.645
very strong bonding relationship with the new recruit,

18:09.675 --> 18:13.685
that, including the MD becoming, for example, as well, the,

18:13.705 --> 18:15.965
the godfather of the new recruits children.

18:16.385 --> 18:19.125
So they went and it was a very strategic, it wasn't,

18:19.225 --> 18:21.005
you know, it wasn't, we are gonna become friends.

18:21.225 --> 18:25.925
It was a very, very strategic approach to embedding that,

18:26.145 --> 18:29.605
new employee, Chinese employee

18:29.785 --> 18:31.685
who they were planning to send to China

18:31.825 --> 18:32.925
to represent the firm

18:33.225 --> 18:35.365
and embedding in within the, the organization.

18:35.945 --> 18:40.005
The, the key contribution that the paper offered, one was

18:40.005 --> 18:43.485
to develop this notion of institutional li of,

18:43.625 --> 18:48.245
of individuals that are able to span, very, very,

18:48.505 --> 18:51.085
diverse institutional frameworks

18:51.505 --> 18:54.925
and adapt according to which framework they're operating in.

18:54.925 --> 18:57.965
So that builds on literature, on cultural liability,

18:58.375 --> 19:00.605
which in the case of the SMEs wasn't that useful

19:00.605 --> 19:03.965
because it's not just a cultural issues when you're trying

19:03.965 --> 19:06.365
to internationalize to, high distance

19:06.545 --> 19:07.925
as emerging markets.

19:08.385 --> 19:10.485
So you have to take into account other aspects,

19:10.485 --> 19:12.845
which is why the institutional,

19:13.125 --> 19:14.525
Lance was, was much more helpful.

19:15.385 --> 19:19.605
Um, I also brought this new mechanisms of,

19:19.795 --> 19:23.245
institutional, dissonance mitigation,

19:23.355 --> 19:27.845
institutional consonants, retuning.

19:28.105 --> 19:31.165
And, and the final mechanism is this of multi-level

19:31.685 --> 19:36.085
strategic embedding, which together can explain the process

19:36.225 --> 19:38.205
of institutional, bridging.

19:38.425 --> 19:42.645
So what I, I contributed through this, this study,

19:42.785 --> 19:45.165
to the literature was the literature looked at it

19:45.225 --> 19:49.885
as a institutional bridging capability, whereas I was able

19:49.945 --> 19:51.365
to identify your process

19:51.665 --> 19:55.005
and explain that process through those three,

19:55.135 --> 19:57.285
mechanisms com in combination.

00:00 - The context of the research was the, the fact that, with globalization and, kind of a, an increase in trade across, across the world from the, the early 1990s, many SMEs were, were suddenly, starting to internationalize to what I describe

00:24 - as high distance markets. So what that means is, in the past they might have, traded or, or internationalized with countries closer to home. But because of the, the emergence of emerging markets, globalization, large ES had done that, type of, of trade and internationalization, activities for quite a long time. But for SMEs, it was quite new.

00:50 - and my past experience as a practitioner, I was, I worked in international business in industry, had made me observe and notice quite a lot of, challenges when it came to, to SMEs. So for, for SMEs which are small and media enterprise, to internationalize to, to distant market, to markets, were quite far away from home. Very, very different for these firms

01:15 - to intentionalize, to those markets. There's a lot of challenges involved because those firms are resource constraints. They're also network constraints. So very often the network will not span such such long distance. so what the lit literature identified was that, those firms needed to develop, what they describe as institutional bridging, which is a type of, of process in order

01:45 - to internationalize far away from home. however, what the literature did not really explain was how was that possible? Because there was a bit of a paradox involved. those firms had to develop this capability of institutional bridging. So, so creating a bridge from their home market to the, the distant horse market, which often in involved a lot of, of highly, different type of environments, you know,

02:17 - institutional environments. So for example, the regulatory and legal framework are often extremely different. If you're internationalizing with Europe, you tend to find that the institutional framework from a regulatory perspective and and legal perspective is kind of similar. If you start looking at emerging market like China and India, obviously the institutional market is, is much more, divergent, you know, different. So that was one of the issues.

02:43 - The other issues is very often SMEs like, knowledge, so it can be linguistic, what we describe in institutional theory as cultural, cognitive, institutions. So very often they didn't understand or speak the languages. and I looked at China, which was, spec particularly challenging. they don't understand the normative, institution either. So for example, the type of business practices,

03:10 - the expectations that, Chinese firms and, and, and, executive might have of what is acceptable or not, in terms of, of doing business. And very often those practices may conflict with UK based practices. And I'll come back on that. When we look at the, the findings, when we talk about the, the mechanisms. So because of those challenges, because of the lack of resources that SMEs have compared

03:36 - to large multinationals, for example, and the lack of network, the, the literature was highlighting the need to develop this capability of institutional bridging. But it's easier said than done. And the, the literature did not explain how exactly would this, this resource constraint and network constrained firms managed to develop that capability. From my experience as well, I knew

04:00 - that many SMEs in the early 1990s and mid 1990s when I was working as a practitioner, would develop networks with, with China as a emerging market. but within a few years, they suddenly would have what I would describe as test catastrophic network collapse, where everything looked okay, you know, things were going great as far as the, the UK SME was concerned, but it suddenly things were completely collapse,

04:29 - and it did not see it coming, and they did not understand why. And for those type of firms, which are again, resource constrained, this was catastrophic because very often it might mean those firms would go bankrupt or, or really have wasted a lot of time and effort, trying to develop their international activities with the market to find all their hopes really crushed. So I had noticed this,

04:53 - but I also noticed that there were some examples of firms, and this comes to why it shows that particular, case that were surprisingly and remarkably successful. And it was really difficult to understand what, what made this firm unusually successful when so many others failed. So this is what sparked my, my interest. And when I joined academia, I, decided to, for my doctoral thesis to kind of look into that, that phenomenon.

05:23 - So Delta was a, British actually based in Scotland type of firm, very traditional firm from, you know, set up in the 19th century. so very long history engineering products. And they, around 2006, they found themselves, at a crossroad because things were not going well. their performance was, was really, problematic. They were actually, really, really struggling. And the largest m and e customer, approached them and said,

05:56 - Right, either you move your manufacturing to China, or we will stop working with you. And that would've meant bankruptcy for, for the SME. So from that situation of really, really challenging, performance situation, by the time I finished interviewing and, and followed that, that process in, in 2014, finished interviewing that firm, they were extremely successful. So what they did by, linking, you know, bring, bringing their, their business part of their business

06:29 - to China, really changed their, their performance completely. So I chose that particular firm. And the other thing I did as well in terms of the case is I, because I was looking at institutional bridging, involving, you know, building a bridge, a network bridge between the home country to the host market, emerging market of, of China, because I was interested in, in high distance, obviously China, UK are two kind of markets separated by,

06:58 - by high institutional distance. But also I wanted to make sure that I, was able to interview people on both side of the bridge, so not just the UK perspective, but get also the, the China perspective. And I was able to, to do this with that particular firm. So the way I kind of looked at this is I thought about institutional capability as what kind of process is that? What does that look like? If we are looking at it on,

07:28 - in terms of process, as in how do you start from stage one, stage two and add, you know, how do does that evolve? What does that look like? And what I wanted to identify were mechanisms that explain. So I wanted to explain the phenomenon. So I wanted to identify mechanisms that could explain how this process was done successfully. So I choose that particularly successful case of, of Delta, and by taking what we call a, a, a critical realist approach, which where you are looking at,

08:01 - the phenomenon from, a multiple dimensions. So the critical realist approach I follow is, is linked to a, a philosopher called Baskar. And he talks about critical realisms as the empirical, which is the experience that pe that individual have of, of particular, event. Then he talks about the, actual, which are the events themselves. So if you think about a process, you'll have a number of events along that process that cannot take place.

08:33 - And this is, the events are what, Baskar described as the actual, and then what the critical realist, ontology of philosophy argues is that these events can be explained, but certain type of, of conditions and structures and, and, and condition and contextual type of factors, which are the mechanisms under the underneath. And this is described as the real. So you have those three kind of levels, three dimension. and in order to understand the real, you have to start

09:09 - through interview at the level of the, the experience of the individual of events. Then you have to trace the process by looking at different events. and then you have to ask certain types of questions that allows you to probe and dig deeper into the reasons why certain events happened and why that event then led to that other event. So you, you would look not just at what happened, but what are the alternative

09:38 - that could have happened and did not. So you would ask questions to people about why did you make that decision of, for example, choosing this particular individual as your representative in China, and the person would explain, and then you would have to probe deeper and, and, and work out what exactly it is about this individual attributes that meant that this was the right person. So what if the individual was not Chinese, for example,

10:07 - because they chose somebody who was Chinese. So what your was not Chinese, what would that change? And how does that explain? So it's a bit of an abductive way of, of looking at the, the phenomenon. Well, getting into the, the findings, I then, divided the, the process into three key bridging stages. So the first one was you had that SME, uk, SME, and they were kind of nearly forced

10:37 - to internationalize to China. It wasn't necessarily the decision. They had no choice. so that was one, one of the, the context, and they had no network. So the, the reason that was an interesting SME as well is because of their absence of knowledge about China and network with China, they had to really start from scratch. So the, the way they approached this is, first they had to build a bridge, and

11:01 - because of certain type of, of circumstances, they, the bridge building event number one, in a very, very particular kind of way. So those conditions, one where the fact that the MD of the company had prior experience of high distance market with India, and they had had extremely challenging time in India, they had failed. So he thought he knew, he was aware of what I called, the, institutional dissonance. So institutional dissonance is the kind

11:34 - of disharmony you might have between two separate markets. So a little bit like when you're listening to a piece of music that's not kind of, working very well, the, the dissonance is because there are differences that create, challenges, conflict between the framework in, in the UK and the framework In China. And, and it was around the disarm between the two, the two markets. So because of that awareness, that was kind of one

12:01 - of really important conditions, is that awareness of the challenges led him to understand that he needed a particular type of representative, which I describe as an institutional hybrid. So somebody who had knowledge of both the institutional framework of the UK and the institutional framework of China. So by being hybrid is because they can operate across both type of, of networks and in order to achieve this.

12:28 - So, so many, many small firms would've gone to China, would've got help from, you know, the equivalent of UKTI at the time to try and identify your representative, through existing network. But this md, because of that awareness of the challenge and the institutional dissonance, decided to actually select a Chinese MBA student in the uk. So we approach a university within very, quite close in Scotland, quite close to where the, the,

12:57 - the firm is, is based. And he interviewed, Chinese MBA students who had studied in the uk because he thought was that these people, one would have a really good, understanding of, of the environment in the UK as well as the Chinese environment, but also their English language might be quite, quite good. So you approach, this is selected,

13:19 - this particular individual we recruited. So one of the, the mechanisms, is this kind of, institutional dissonance mitigation, which means that the, the awareness of the dissonance led the MD to choose someone that he thought could mitigate some of these issues, but that that wasn't enough. because he also realized that in order to, strengthen the network bridge, he also had to maintain the relationship over long, longer period of time.

13:57 - So the author mechanism that came into play and, and those three mechanism that I identified have to be thought about in combination, they don't operate on their own. They, they work because they work in combination to explain the, the process of constitutional bridging. What you realize as well is to, reinforce, so that's what I called about. The, the, even two was the reinforcement of the, the process of institutional bridging

14:26 - in order to reinforce. He has, he also had to ensure that that, institutional hybrid, the person on the other side of the bridge eventually in China, that that institutional hybrid, would also be strategically embedded within the organization, within the, British, institutional framework as well. And through a, a form of bonding mechanisms as well within them.

14:56 - So what I describe as a mechanism of strategic multilevel embedding is the fact that it worked strategically and very, very hard at one building trust and bonding with that institutional library before that person was even, sent to China. So that, that, that institutional Chinese institutional library worked within the organization in the UK for six months, where it was also socialized to the organizational culture of the, of the firm.

15:28 - So products expectations as well as further socialize to the institutional framework of the uk what is acceptable, what is not. So it was at, that's why I call it multi-level strategic embedding, because it was at the level of the individual, the bonding, the organizational, the firm, organizational culture products and so on. And also at the level of the, the nation, the country, the institutional framework of, the reg, the kind of regulatory normative, expectations as well,

16:02 - because there's a lot of conflict between what would be accepted in, in China versus what would be accepted in acceptable in the uk from a business perspective, there's very different ways of, of doing business. So that was the second mechanism that kind of helped with the first one together, explain how they reinforce that bridge. And for an ME this is really important because the usual way to protect yourself against

16:30 - opportunistic behavior and opportunism is through, kind of legal contract type of enforcement. But there's two problems. One, for an SME, the resource constraint means that you do not always have the resources to ensure you can enforce the contract if you have to go to court, for example, plus in the context of a very high distance market like China. The, the second, issue is that because you, you have a very different legal framework in

16:59 - China, you don't have this kind of rule of law, system. The chance of getting a, a legal contract enforce as a foreign entity is also a bit of a challenge. So from an SME perspective, the legal contract was important as part of the discussion and understanding, setting things up, having those discussion. But when it came to enforcement of those contracts, it would've been very, very difficult. So they knew that to protect themselves against any

17:27 - potential opportunistic behavior, they also needed to reinforce, to embed this future representative, this institutional hybrid, at the, at those kind of three levels. And they were extremely successful, and they went to incredible land to achieve this. One of the example that I strongly remember is the, the firm invited, For example, their, their new recruits, parents who were Chinese teachers,

17:54 - and they inviting them to come over, they took them across the uk. They were English teachers in China, so they took them across the uk. They went to start Aven. they really build a very, very strong bonding relationship with the new recruit, that, including the MD becoming, for example, as well, the, the godfather of the new recruits children. So they went and it was a very strategic, it wasn't,

18:19 - you know, it wasn't, we are gonna become friends. It was a very, very strategic approach to embedding that, new employee, Chinese employee who they were planning to send to China to represent the firm and embedding in within the, the organization. The, the key contribution that the paper offered, one was to develop this notion of institutional li of, of individuals that are able to span, very, very, diverse institutional frameworks

18:51 - and adapt according to which framework they're operating in. So that builds on literature, on cultural liability, which in the case of the SMEs wasn't that useful because it's not just a cultural issues when you're trying to internationalize to, high distance as emerging markets. So you have to take into account other aspects, which is why the institutional, Lance was, was much more helpful. I also brought this new mechanisms of,

19:19 - institutional, dissonance mitigation, institutional consonants, retuning. And, and the final mechanism is this of multi-level strategic embedding, which together can explain the process of institutional, bridging. So what I, I contributed through this, this study, to the literature was the literature looked at it as a institutional bridging capability, whereas I was able to identify your process and explain that process through those three,

19:55 - mechanisms com in combination.

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