Determinants of foreign firms' collective action in emerging economies: evidence from India

Emerging economies are increasingly becoming long-term investment locations for Multinational Enterprises (MNEs) from developed countries. An important facet of foreign firms’ strategies in emerging economies is to engage in the policymaking process of these economies, as a means to reduce the negative impact of uncertain institutional environments and to shape host-government policy in a way that is conducive to their long-term business operations (Ahuja and Yayavaram, 2011; Li, Zhou and Shao, 2008; Luo, 2001, 2006; Sun, Mellahi and Thun, 2010; Zhou, Poppo and Yang, 2008). A key decision for firms in this regard is about their nature of participation in the policymaking process (Hillman and Hitt, 1999; Hillman, Keim and Schuler, 2004). While some firms may choose to participate in the policy process on an individual basis — that is, without co-acting with other firms, others may decide to participate collectively, or in a collaborative manner, such as through associations of firms belonging to the industry/sector or with those that collate the voices of firms across industry verticals (Astley and Fombrun, 1983). By engaging in collective action, foreign firms can influence policy and governance issues such as product quality standards, codes of conduct and environmental protection that are of collective interest (Boddewyn and Doh, 2011).