Navigating institutional change: An historical perspective of firm responses to pro-market reversals

We explore the strategic responses of multinational enterprises (MNEs) in the context of protracted institutional change. Analyzing the long-run trajectory of three British MNEs during the setting of Indian independence, we find that these firms engaged in a series of tactical and strategic responses to address uncertain institutional changes in the form of pro-market reversals. Our findings reveal how MNE responses are characterized by path dependence and path creation in that they are historically conditioned by patterns of previous decisions and actions. We demonstrate how tactical responses to earlier institutional changes coalesce to shape dominant strategic responses in later periods. Our paper contributes to a more holistic conceptualization of how MNEs strategize in response to pro-market reversals by integrating a business history lens.