The Effect of Institutional Capabilities on E-Business Firms’ International Performance

Despite the growing trend of internationalisation in e-business, academic research in this area is sparse. This study develops and tests a theoretical framework of the drivers of international performance for emerging market e-business firms. Specifically, we focus on the role of institutional capabilities in terms of socio-political networking and business model innovation in shaping emerging market e-business’s international performance. Based on a unique sample of Chinese e-business firms, our empirical findings indicate that these firms’ institutional capabilities are positively associated with their performance in foreign markets, and that the relationship is stronger when the firms face more intense domestic institutional hostility and when the institutional environments between the home and host countries are similar. However, the relationship is weaker for firms with better reputations. The paper discusses the theoretical and managerial implications.