Coping with Institutional Voids in Cambodia : A Qualitative Case Study on Institutions

Abstract: Although emerging economies have received increased attention by both firms and academia in recent decades, there is still more that can be done. Calls have been made by both academic authors and journals to conduct research within institutionally voided environments, a call that was answered by this study. Specifically, this study answers calls related to: examining institutional strategies; examining the relationship between nonmarket and market exchanges. The purpose of this study was to gain a deeper understanding of how the nonmarket-market relationship affects firm strategies and behavior in Cambodia, an especially voided country due to their turbulent recent history. A second layer of the purpose was to compare firms and explore their similarities and differences to understand the isomorphic pressures of Cambodia. A qualitative case study approach to the study was undertaken to achieve the study’s purpose. Thirteen semi-structured interviews were conducted with various managers who have the ability to make strategic decisions in their respective firms. All the interviewees were from the private sector but were scattered throughout different industries and were asked about their experiences and perception of the Cambodian business environment, mainly focusing on the institutional context. The data collected were then structured based on three main themes and corresponding subthemes. This thematic division was the basis for the analysis of the study as well as the conclusion. Based on the analysis of the data, it can be concluded that the nonmarket is indeed superordinate to the market environment in Cambodia. From a macro perspective, the institutional voids affect all firms in Cambodia, and the firms utilize similar variations of four institutional strategies: internalization, substitution, buffering, and bridging. Because the nonmarket environment in Cambodia is so strong, this results in both voids in the market environment and firms becoming more isomorphic. These four strategies were not the only ones identified, other strategies, namely outsourcing and institutional borrowing, were noted as well because of the institutional voids. Theoretically, this study contributes to revising and improving Institutional Theory and reinforcing both Institutional Theory and the Resource-Based View. Social contributions relate to assisting policymakers in Cambodia to understanding their most problematic institutions and developing or improving those institutions. Practical contributions are aimed at practitioners seeking to or doing business in Cambodia, assisting them in understanding the institutional context of Cambodia and knowing how to navigate within its boundaries. This practical contribution can also be considered a social contribution, as more businesses enter Cambodia and as firms grow, the combination of firm entrance and growth creates more jobs and stimulates the economy.