The Performance Impact of Informal and Formal Institutional Differences in Cross-Border Alliances

Sougand Golesorkhi, Roy Mersland, Trond Randøy*, Oded Shenkar

*Corresponding author for this work

Research output: Contribution to journalJournal articleResearchpeer-review


This study addresses the simultaneous and diverse effects of differences in informal and formal institutions on cross-border alliances’ financial performance. We utilize data from 405 microfinance institutions (MFIs), based in 74 developing countries, that have alliances with partners from developed countries. We find that the impact of informal institutional differences between MFIs and their cross-border partners is sigmoid-shaped, with performance first increasing, then declining, before improving again as informal institutional differences grow large. By contrast, formal institutional differences appear to be detrimental to MFIs’ performance. Consistent with our prediction, we find that MFIs’ cross-border experience moderates both formal and informal institutional effects.

Original languageEnglish
JournalInternational Business Review
Issue number1
Pages (from-to)104-118
Number of pages15
Publication statusPublished - Feb 2019
Externally publishedYes


  • Cross-border alliance
  • Performance
  • Informal institutional differences
  • Formal institutional differences
  • Microfinance industry

Cite this