Navigating institutional voids in global value chains : the role of evolving informal institutions and institutional technologies

Purpose: The purpose of this study is to advance understanding of how informal institutions, including digital platform-type institutional technologies, influence institutional voids and exporting mode decisions of transition economy firms. The study also examines how informal institutions evolve and interact as they influence institutional voids and exporting mode choices, and how such decisions might be explained from a knowledge-based perspective of firm internationalisation. Design/Methodology: This study adopts an exploratory case study approach. Our empirical evidence is obtained from internationally oriented firms and expert informants in Kyrgyzstan during two separate fieldwork periods. This longitudinal design facilitated our understanding of how institutions evolve. Findings: We find that older informal institutions and their newer counterparts, including digital platform-type institutional technologies, influence institutional voids, but the latter appear to be increasingly influential over time. The study firms seem to be evolving away from relying on older informal practices in favour of newer arrangements and mechanisms. As the latter become more dominant, they, particularly collaborations with NGOs and digital platforms, appear to steer firms toward more direct exporting options, including virtual presence and associated value chain activities. Originality/Value: Our paper makes original contributions to the institutional theory and internationalisation theory, specifically the knowledge-based view of firm internationalisation. It advances understanding of the influence of compensatory mechanisms on exporting mode choice, by showing how increasing reliance on newer informal structures, including digital platform-type institutional technologies, leads to greater adoption of more direct exporting modes. The study’s longitudinal design also shows how informal institutions evolve to influence both institutional voids and exporting mode decisions. Furthermore, it offers important insights regarding how newer informal institutions interact to steer SMEs toward more direct engagement in international markets and value chains, with attendant international marketing knowledge benefits. Additionally, the paper extends scholarly debates to the under-explored transitional context of Central Asia.