An institution-based view suggests that the success and failure of firms are enabled and constrained by business norms of the host nation.

Question

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An institution-based view emphasizes the importance of institutional factors, such as business norms, regulations, and governance structures, in shaping the strategies and outcomes of firms operating in a particular country. According to this perspective, firms that align their practices with the prevailing institutional environment are more likely to succeed, while those that deviate from these norms may face barriers to entry, legal sanctions, reputational damage, or other forms of institutional punishment. Therefore, a firm's success or failure cannot be fully understood without taking into account the institutional context in which it operates.

An Institution-Based View Suggests That the Success and Failure of Firms