Institutional Duality

Neo-institutionalism asserts that organizations must demonstrate legitimacy in their surrounding institutional environment to survive. Based on this assertion, foreign subsidiaries of multinational corporations, which are embedded in the institutional environments of the host country and the parent organization, must secure legitimacy in both institutional environments simultaneously. This condition encountered by the subsidiaries is called “institutional duality.” Prior studies on institutional duality have focused exclusively on private-sector organizations, primarily the foreign subsidiaries of multinational corporations. However, public-sector organizations have been ignored. Consequently, the characteristics of institutional duality faced by these organizations remain unrevealed. This study, which targets an overseas office of a bilateral development cooperation agency, fills this knowledge gap. The researcher conducted nineteen semi-structured in-depth interviews with the expatriates and locally hired employees of the overseas office located in Central Asia. Through Reflexive Thematic Analysis, three themes emerged. They are (1) powerful headquarters/home-country but weak host-country regulative institutional pressures; (2) mixed headquarters/home- and host-country normative and cultural-cognitive institutional pressures; and (3) divergent perceptions of institutional duality between expatriates and locally hired employees. Research implications are threefold. First, the nature of institutional duality experienced by public-sector organizations can vary significantly from that faced by private-sector organizations. Second, because the perceptions of institutional duality differ between expatriates and locally hired employees, further research on intra-organizational behaviors is needed. Third, the effects of geographical distance may be undermined since the subject office faced powerful institutional pressures from its distant home country and headquarters.