Hybridization practices as organizational responses to institutional demands: The development of Western retail TNCs in China

Abstract

This longitudinal case study evaluates the strategic responses of Western retail transnational corporations (TNCs) to China’s business environment. It explicates how hybridization helps adapt and ultimately alter local institutional settings. Two-fold findings are discussed: the hybrid practices impacting on host market institutions, involving laws and regulations, fair competition, business networks, empowerment, corporate social responsibility, employee retention and quality control; and those impacting on consumption patterns, involving tailored offerings, targeting, new market ideology, store location, price and cost leadership. By doing so, the TNCs create new competitive pressures on China’s retail market. The findings show the transfer of management practices that do not align with a host market may subtly alter its norms and practices. To sustain competitive advantage and enhance territorial embeddedness, the TNCs switch their key stakeholders from the governments to their businesses, the society and the consumers over time. However, their long-term legitimacy remains uncertain in China