What motivates international business? and what factors determine the triumphs and failures of firms around the globe? are some of the most fundamental questions confronting international business research (Peng, 2004a, Buckley, 2002). Drawing from resource-based view theory (RBV) and institutional theory, this thesis explores the dynamic relationship between the performance enhancing effects of intangible assets and institutions. RBV posits that firms are driven by utilizing their resources to maximise economic rents (Barney, 1991, Dierickx and Cool, 1989), and Intangible assets are a critical driving force in achieving superior economic rent and contribute towards firm heterogeneity and performance variations . Institutional theory claim that the rule in which firms operate are set by the economic, political, and social institutions (i.e., the legal framework and its enforcement, regulatory regimes, property rights, and information systems) (North, 1990). The interdependent relationship between a firm’s intangible assets and the institutional contexts in which the firm operates plays a key role in the firm’s ability to appropriate economic rents from their intangible assets (Peng, 2002, Oliver, 1997). Prior research assumes that firms possessing superior intangible assets are always better off in any given environment, and the influence of the institutional setting is homogenous between firms operating in similar environments. Accordingly, this thesis offers evidence that, the performance enhancing effects of intangible assets are influenced by the level of institutional quality in which they utilized in, and these effects vary between different firms. We test this by using three sub-samples to compare home-country institutional quality effects between multinational enterprises vs. national enterprises, exposure to host-country institutional quality between advanced-economy multinational enterprises (AMNEs) and emerging-economy multinational enterprises (EMNEs), and host-country institutional quality influences between AMNE subsidiaries and EMNE subsidiaries.
