We draw upon the institutional theoretical perspective to study Indian firms' internationalization during periods of institutional change. We focus on firms establishing a subsidiary abroad. We delve into the nature of institutional change and propose two categories of institutional change that have impacts of different magnitudes on international investments. We also investigate the case of firms affiliated with domestic business groups. We develop four hypotheses and test them using data on Indian firms. Our findings provide interesting insights into different institutional factors that promote firms' internationalization in a context characterized by dynamic change. The results of our study have significant theoretical and managerial implications.