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The Growth of the Firm in Planned Economies in Transition: Institutions, Organizations, and Strategic Choice

Mike W. Peng and Peggy Sue Heath
The Academy of Management Review
Vol. 21, No. 2 (Apr., 1996), pp. 492-528
Published by: Academy of Management
Stable URL: http://www.jstor.org/stable/258670
Page Count: 37
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
The Growth of the Firm in Planned Economies in Transition: Institutions, Organizations, and Strategic Choice
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Abstract

Highlighting an important facet of diversity among organizations operating in different institutional environments, this article presents a model of the growth strategy of the firm in planned economies in transition such as Eastern Europe, the former Soviet republics, and China. Focusing on the stylized state-owned enterprises, we explore the interaction between institutions and organizations in these countries. Given the institutional constraints, neither generic expansion nor acquisitions, two traditional strategies for growth found in the West, are viable for firms in these countries. Instead, firms settle on a network-based strategy of growth, building on personal trust and informal agreements among managers. The institutional environment that leads to this unique strategy of growth is examined, and boundary conditions, limitations, and implications of this model are discussed.

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