Mike Peng Global Strategy

[Vinnie Frevert]

NaveenJindal created the chair in June 2011. Peng filled the position in September 2011. The chair supports the research and scholarly activities of the holder in the Naveen Jindal School of Management.

Dr. Mike Peng is one of the most prolific and most influential scholars in global business strategy. With more than 120 articles, Peng is best known for his development of the institution-based view of strategy and his insights about the rise of emerging economies such as China in global business. Both the United Nations and the World Bank have cited his work. At UT Dallas, he has been the No. 1 contributor to the list of 45 top journals tracked by Financial Times. More than 40 of his articles appear on the Financial Times list. His best-selling textbooks, Global Strategy, Global Business and GLOBAL, have been translated into Chinese, Portuguese and Spanish, and are used in more than 30 countries.

An Academy of Management Perspectives study ranked Peng as the fourth-most influential scholar among all management professors who have received PhD degrees since 1991 based on impact inside and outside of academia. A study in the Asia Pacific Journal of Management found him to be the most-cited overseas Chinese scholar in strategy. In June 2015, the Journal of International Business Studies will present a Decade Award to Peng at the Academy of International Business annual meetings in Bangalore, India, for a highly cited paper that he published with K. Meyer in 2005 on Central and Eastern Europe.

Peng is a recipient of a National Science Foundation CAREER Award, a U.S. Small Business Administration Best Paper Award, a Distinguished Scholar Award from the Southwestern Academy of Management, and a Scholarly Contribution Award from the International Association for Chinese Management Research. He has been quoted in such major publications as The Economist, Newsweek, The Dallas Morning News, The Atlanta Journal-Constitution, The World Journal, Business Times (Singapore), CEO-CIO (Beijing), Sing Tao Daily (Vancouver) and Brasil Econmico (So Paulo), as well as on the Voice of America.

Peng joined UT Dallas in 2005. He previously served on the faculties of the University of Hawaii, Chinese University of Hong Kong and Ohio State University. He earned his bachelor of science in business administration from Winona State University and his doctorate in business administration from the University of Washington.

What drives firm strategy in international business (IB)? What determines the success and failure of firms around the world? These are some of the most fundamental questions confronting the IB field (Peng, 2004a). Traditionally, there are two perspectives that address these two questions. An industry-based view, represented by Porter (1980), argues that conditions within an industry, to a large extent, determine firm strategy and performance. A resource-based view, exemplified by Barney (1991), suggests that it is firm-specific differences that drive strategy and performance. These influential views have been developed primarily in the field of strategic management. While IB and strategy are closely allied fields (Peng, 2006; Ricart, Enright, Ghemawat, Hart, & Khanna, 2004), what are the contributions of IB research that can add to our understanding of the two crucial questions raised earlier?

The remainder of the article first sketches the contours of an institution-based view of IB strategy and raises a key question. Then we draw on four diverse areas of substantive research as examples of how the new institution-based view contributes to our understanding:

While using emerging economies as a new empirical context to test and extend existing theories is a time-honored tradition in IB research, it is imperative that IB research explicitly contributes to the theoretical development of the larger field of business disciplines and social sciences (Meyer, 2006, 2007). Specifically, we argue that research with a focus on emerging economies helps lead to the emergence of an institution-based view of strategy, in parallel with the traditional industry- and resource-based views.Footnote 4

This Perspective paper focuses on the political, legal, and societal aspects of institutions. To illustrate the legal aspect of the institution-based model, we discuss two important issues in IB: antidumping as entry barriers and corporate governance in emerging economies. To highlight the political and societal aspect in the institution-based model, we focus on two countries that have emerged as important players in the global economy: India and China.

The rise of the institution-based view as a dominant perspective in strategy and IB research on emerging economies can be seen in the collection of papers in two special issues that are influential on such research. In 2000, seven out of 13 papers (54%) in the Academy of Management Journal special issue on strategy research in emerging economies, edited by Hoskisson et al. (2000), rely primarily on institutional theory. Consequently, institutional theory is viewed by Hoskisson et al. (2000) as one of the top three most insightful theories when probing into emerging economies (the other two are transaction cost economics/agency theory and the resource-based view). However, Hoskisson et al. (2000: 263) predict that the importance of institutional theory may decline as emerging economies become more developed. This prediction has been refuted by the increasingly voluminous research that draws on the institution-based view to tackle IB strategy problems in emerging economies. Five years later, in 2005, seven out of eight papers (88%) in the Journal of Management Studies special issue on strategy research in emerging economies, edited by two of the same editors as for the AMJ special issue and two new editors (Wright et al., 2005), are institutional papers. The papers in both AMJ and JMS special issues investigate a broad range of IB and strategy issues, such as:

It is important to note that the two AMJ and JMS special issues on emerging economies have no preconceived preference for any particular theoretical perspective. Instead, there is a rich and diverse repertoire in the theory tool bag for strategy and IB scholars, who are usually trained to draw on the most relevant and insightful tools to solve theoretical and empirical problems at hand (and not become slaves to any particular school of thought). The fact that institutional theory becomes the most frequently drawn upon theoretical tool speaks volumes about the particular usefulness of this perspective when seeking to better understand the unfolding competition in emerging economies (Hafsi & Farashahi, 2005). Such research, in turn, contributes to the larger field beyond the more specialized work on emerging economies by articulating the emergence of a third leg of the strategy tripod (see Figure 1).

The rise of new institutionalism throughout the social sciences can be traced to the 1970s (Scott, 1995). Its penetration into the IB and strategy literature is a more recent phenomenon since the 1990s (see Oliver (1997) and Peng and Heath (1996) for some early examples, and Dunning (2004: 19) and Mahoney (2005: 223) for recent acknowledgments). There is significant path dependency (or historical coincidence) underpinning the rising interest in this perspective. The rise of emerging economies on the worldwide stage at about the same time affords great opportunities to extend and develop the institution-based view (Meyer & Peng, 2005). Since different fields embracing the new institutionalism pursue different questions, it is important to identify the key question for IB and strategy research (Peng, 2004a).

Why has the Indian IT/BPO industry emerged as a global powerhouse (second only to the United States)? Most existing answers focus on the industry- and resource-based views, by highlighting the nature of this industry, whose work can be performed off-site, and the capabilities of certain Indian firms with the enviable combination of low costs and excellent skills (Ethiraj, Kale, Krishnan, & Singh, 2005; Garud, Kumaraswamy, & Sambamurthy, 2006; Gopal, Sivaramakrishnan, Krishnan, & Mukhopadhyay, 2003). While these answers are certainly insightful, they do not paint a complete picture. An institution-based answer, among other factors, would point to political, legal, and societal changes in institutions. Earlier decisions by the Indian government to invest in the higher education of approximately top 5% of the university-eligible population is one of the changes.Footnote 9 An institutional explanation would also probe into various legal and regulatory reforms that have liberalized the economy since 1991. Domestically, India's post-1991 economic reforms have made an open, competitive, and entrepreneurial environment possible (Kedia, Mukherjee, & Lahiri, 2006). Beyond India, the larger international environment in favor of globalization in the 1990s also helped.

However, as the political winds change, the phenomenal success of some Indian firms has more recently been under attack in the West, both formally and informally. Formally, in order to protect jobs, a number of American states have recently started to pass laws to ban Indian firms from being awarded official contracts. Informally, the backlash is more widespread. Facing the prospects of significant job losses, numerous politicians, journalists, union activists, and displaced employees in developed economies are unhappy and demand protectionist actions.

Another suggestion, originated in the context of Anglo-American corporations with diverse shareholders but few blockholders (large shareholders) and with managers having too many de facto control rights, is to increase the shareholding of blockholders (who are usually defined as anyone having more than 5% of the equity). This suggestion, if implemented in emerging economies, is likely to be disastrous, because the main problem there is that controlling shareholders usually already have had too much concentrated ownership and control rights, which allow some of them to potentially expropriate minority shareholders (Chang, 2003). In emerging economies, governance reforms need to find ways to reduce (certainly not increase!) such concentrated shareholding in the hands of controlling shareholders (Morck et al., 2005; Young et al., 2008).

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