Foreign direct investments that come with globalization bring benefits with them if opportunities are handled in the best manner. One opportunity rises with the institutional difference issue. Different countries have different institutional profiles. Institutional profiles briefly include culture, social norms or governmental regulations. When investing abroad, the bigger the institutional difference gets between the home country and the host country, the harder it gets to acquire the local institutional knowledge. This may result in a negative effect in the firm performance. To make the right decisions managers, being an important part of the decision making process, are required to have a profound understanding and knowledge of the local institutional environment. In here the investing companies have two options; either to use local managers or to acquire knowledge through the accumulation of experience. Building on the institutional theory, sixteen multinational companies operating in the manufacturing industry in Turkey are analyzed with the aim to contribute to the understanding of whether native managers or company experience is creating a better firm performance in consideration with handling the institutional differences. The results of this study point out that, the manager origin indeed influence the firm performance and native managers have a positive effect on the firm performance.

<p>This thesis studies how experiences influence the development of institutional knowledge within business relationships. It contributes to international business research by clarifying how experience develops the institutional knowledge of firms and what outcome such knowledge development has on firms’ internationalizations. The thesis identifies a need to distinguish between different types of experiences when investigating institutional knowledge development. In addition, the thesis compares different types of knowledge with institutional knowledge as to understand how firms learn to overcome cultural ignorance. </p><p>The empirical setting consists of quantitative research of small- and medium sized firms. The findings show that market-specific experiences increases a firm’s institutional knowledge whereas experiences of multiple markets contribute to the firm’s perception of a greater need of institutional knowledge when conducting business with their specific partner. However, these experience effects are influenced by firms’ mode of operation (export vs. subsidiaries) in the international markets and mediated by cultural distance. Furthermore, the results show that despite the increased complexity that experiences of multiple markets lead to, such experiences increase a firm’s competence in foreign institutional environments. In addition, the findings show that firms lacking in ability to adapt their business also perceives a lack of knowledge about a country’s institutions and the customer.</p>

This thesis studies how experiences influence the development of institutional knowledge within business relationships. It contributes to international business research by clarifying how experience develops the institutional knowledge of firms and what outcome such knowledge development has on firms’ internationalizations. The thesis identifies a need to distinguish between different types of experiences when investigating institutional knowledge development. In addition, the thesis compares different types of knowledge with institutional knowledge as to understand how firms learn to overcome cultural ignorance. The empirical setting consists of quantitative research of small- and medium sized firms. The findings show that market-specific experiences increases a firm’s institutional knowledge whereas experiences of multiple markets contribute to the firm’s perception of a greater need of institutional knowledge when conducting business with their specific partner. However, these experience effects are influenced by firms’ mode of operation (export vs. subsidiaries) in the international markets and mediated by cultural distance. Furthermore, the results show that despite the increased complexity that experiences of multiple markets lead to, such experiences increase a firm’s competence in foreign institutional environments. In addition, the findings show that firms lacking in ability to adapt their business also perceives a lack of knowledge about a country’s institutions and the customer.