Two

Spotting and Responding to Institutional Voids

THIS CHAPTER BUILDS ON OUR structural definition of emerging markets to equip managers with toolkits to spot and respond to institutional voids.1 Emerging markets are hardly uniform in the nature and extent of their institutional voids. The development of business strategy in any economy is driven by three primary markets—product, labor, and capital—and institutional voids can be found in any, or all, of these markets in developing countries.

The advantage of an institutional approach to considering emerging markets is that it specifies the particular combination of features that prevents efficient exchange in each market. Some countries might lack specialized intermediaries in the labor market ...

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