Navigating the web of informal institutions when investing in a strange land

Multinational enterprises (MNEs) need to understand and handle various informal institutions in host countries to survive and succeed. How MNEs effectively manage informal institutional characteristics of host countries is an important question for both practitioners and scholars. This paper addresses this important but neglected topic based on an in-depth longitudinal qualitative study. It identifies some key informal institutions in Australia, examines how such institutional distinctiveness shapes the behaviour of Chinese expatriates and MNEs and how they handle such informal institutional differences between China and Australia. Our findings challenge some taken-for-granted assumptions regarding informal institutions in the literature and demonstrate that informal institutions of host countries significantly shape the behaviour of expatriates and firm-level strategies of MNEs.