Private permissioned blockchain platforms promise to increase the efficiency of international trade networks by offering a hybrid governance arrangement that reduces the transaction and governance costs of international trade administration. However, potential users have declined to join such platforms due to concerns about platforms' commitment to users' interests and platforms' ability to adapt to external shocks and changing business needs. Analyzing the failure of TradeLens, a Maersk/IBM private permissioned blockchain platform, we argue that the very characteristics that increase efficiency also constrain the adaptation of platforms and business models, creating an efficiency-adaptability paradox. To navigate this paradox, we propose a two-layer governance configuration which utilizes private permissioned blockchain to increase transaction efficiency and relational shared governance to guide infrequent, consequential platform adaptation. We then apply principles of commons governance to specify mechanisms for relational shared governance on a global scale. We contribute to theorizing digital platforms the insight that private permissioned blockchain platforms suffer from an efficiency-adaptability paradox and offer a governance configuration for navigating the paradox. We contribute to relational and commons governance theory mechanisms that expand shared governance to a global scale. We connect the governance challenges of private permissioned blockchains to hybrid governance theory by outlining a governance configuration that balances the interests of users and sponsors in voluntary global networks and ecosystems in which market and hierarchy are infeasible. Practically, we describe the governance configuration and mechanisms concretely enough to be implemented by sponsors of global private permissioned blockchain platforms.
This paper tests the extent to which institutional coherence, i.e. the degree to which the mutual compatibility of laws, rules, and regulations across different areas of an economy (e.g., labour relations, finance, product markets, education), explains cross-national diversities in innovation. Combining data from the Community Innovation Survey with newly constructed measures of institutional coherence, we assemble a novel panel covering 20 economies from 2004 to 2018. Using both panel modelling and structural equation modelling (SEM), we find that institutional coherence is positively associated with innovation performance, exerting both direct and indirect cross-national structural associations across a range of robust specifications. The findings expand research in this area by contributing three new findings. First, it reframes the debate on institutions and innovation by characterising institutional coherence, the systemic alignment of a country's institutional architecture, as a higher-order structural condition associated with innovation, conceptually distinct from the effectiveness and/or quality of individual institutions. Secondly, by identifying the existence of indirect association we demonstrate that this decomposition positions coherence as a meta-institutional property associated with how other ‘institutions’ relate to innovation; and third, we highlight the importance of equifinality, highlighting the existence of multiple yet coherent institutional configurations in sustaining high levels of innovation. The results highlight the need for policymakers to prioritise aligning institutions around clear, consistent institutional logics, as piecemeal or transplanted best-practices risk introducing uncertainty, undermining institutional coherence and innovation.
Political risk is a critical and dynamic institutional factor influencing foreign direct investment (FDI), yet much research treats it as a static condition assessed at the time of entry. This study emphasizes the inherently dynamic nature of political risk and its impact on firms' location decisions. Drawing on the dynamic institution-based view, we argue that firms assess not only the current level of political risk but also its future development, based on prior trends and institutional signals. However, higher-order political risk dynamics may reduce the extent to which past signals remain informative about future developments, increasing uncertainty about future political risk and weakening the relationship between risk trends and investment decisions. We further argue that firms with greater host-country experience are better equipped to interpret institutional signals. Analyzing a dataset of 27,277 FDI projects from 2013 to 2019, this study finds that decreasing political risk prior to entry positively influences location choice. However, higher-order political risk dynamics in the past weaken this effect unless firms possess prior host-country experience. Our study contributes to research on location choice, political risk, and the dynamic institution-based view. First, this study advances research on political risk and FDI location choice by shifting attention from political risk as a static condition to how firms form expectations about its future development. Second, it extends the dynamic institution-based view by showing how linear and non-linear institutional dynamics can affect the extent to which past developments remain informative for forming expectations about future institutional conditions.
Cities in emerging markets increasingly shape sustainable development, yet the city-level characteristics attracting green-tech foreign direct investment (FDI) remain underexplored. Drawing on information cost economics, we conceptualize a city's corporate environmental management information disclosure (EMID) as an information-based regulatory feature that reduces foreign investors' information acquisition costs by transforming previously private firm-level environmental management knowledge into publicly accessible information. We further argue that the effectiveness of EMID depends not only on the availability of disclosed information but also on its quality, particularly its credibility and completeness. Using panel data for 2008-2023 from 285 Chinese cities, we find that higher EMID levels are associated with greater green-tech FDI inflows. Moreover, this positive relationship is strengthened by stringent environmental regulation, which enhances disclosure credibility, and is weakened by prevalent ESG underreporting, which undermines disclosure completeness. Our findings contribute to subnational FDI location research and the environmental regulation literature by demonstrating how local information environments shape green-tech investment allocation.
With the acceleration of green transformation, the philosophy of environmental, social, and governance (ESG) is gradually making its way into the operation and management of enterprises. However, cross-national institutional divergence in ESG ratings often produces different rating results for the same enterprise, which may have substantial effects on enterprises' green innovation strategies. Therefore, we use listed companies in China from 2015 to 2023 as the sample to study the impact of cross-national institutional divergence in ESG ratings on green innovation strategies. The results indicate that, compared with substantive green innovation, ESG rating divergence promotes strategic green innovation. Mechanism analysis reveals that ESG rating divergence induces enterprises to engage in strategic green innovation by reducing institutional investor holdings and exacerbating corporate financing constraints. Further analysis confirms that strategic green innovation is not triggered by ESG rating divergence within a single institutional system and that patent protection strength functions as an effective institutional constraint that discourages enterprises from engaging in strategic green innovation merely to respond to ESG rating divergence. Heterogeneity analysis reveals that in state-owned enterprises and those with high levels of corporate governance, ESG rating divergence promotes substantive green innovation. Overall, we provide empirical evidence for improving the construction of China's ESG rating system and help promote the development of corporate green innovation.
