Multinational Enterprises As Institutional Entrepreneurs: Directed and Diffused Institutional Entrepreneurship

Abstract: Co-evolutionary theory in institutional approaches to international business posits that, contrary to traditional institutional theory, multinational enterprises (MNEs) can and do alter the institutional environments of host countries where they operate. MNEs therefore can act as institutional entrepreneurs. This paper complements co-evolutionary theory by arguing that MNE’s engage in institutional entrepreneurship with local institutions in two overarching ways: directed and diffused. Directed institutional entrepreneurship is when the MNE targets one specific local institution and actively engages with it to foster change. In contrast, diffused institutional entrepreneurship is widespread and the MNE’s institutional entrepreneurship can be seen throughout several institutional interfaces. Using case studies based on a mining multinational, Vale S.A., and its investments in the Global North (Canada) and the Global South (Mozambique), this paper explores the differences between directed and diffused institutional entrepreneurship.