Businesses strategies are similar to ancient temples in that their primary purpose is to provide guidance concerning decision-making and because they tend to stick around for a long time. Like ancient structures, most strategies are built atop foundational pillars, often referred to as conditions or criteria. A strategy can be assessed against the criteria in order to determine its viability and long-term stability. If too many of the criteria (the pillars) fail, then the strategy topples to the ground and crushes the organization beneath its weight.
The framework put forth by Khanna, Palepu, and Sinha in “Strategies That Fit Emerging Markets” admirably frames how multinational expansion can be assessed against criteria of institutional and cultural context. The framework opens with the acknowledgement that globalization strategies are difficult and that most decisions in this space are made based on gut instinct, anecdotal evidence, or personal experiences. Further, traditional models constructed from cultural indices are often flawed because they fail to account for intricate differences between countries that register as similar on their scales. While companies cannot employ the same strategy in every country, after analysis, they can associate similar countries as a system and deploy an adaptive strategy throughout the region.
Countries are uniquely shaped by their social and political culture. Often companies fail to recognize that emerging markets are inherently dissimilar to their home market. Success in the nascent market depends on novel implementations and adaptations of existing strategies. I appreciate that the framework focuses on more objective metrics (regulations, cultural biases, etc.) rather than opinion alone. The metrics revolve around identifying institutional voids and then strategically responding to those voids. The assessment uses a bottoms up approach in which the strategist begins with their goal in mind (entering the Chinese commodities market for instance) and checks their agenda against the institutional contexts of the local. After answering the questions that populate each criterion, the organization will have enough information to decide between three strategies: to adapt the business model, to change the Institutional context, or to stay away from the market. From there, the organization can either accept a strategy and proceed forward or change their business model and then reassess their strategy. Through this step-wise procedure, the organization can ensure that its business model does not collapse in on them due to unsupported expansion.