Comparative capitalism and the empirical taxonomy of context: enhancing the institutionalist blueprint

Purpose Critiques of international business (IB) have long pointed to the weaknesses in the understanding of context. This has ignited debate on the understanding of institutions and how they “matter” for IB. Yet how institutions matter ultimately depends on how IB applies institutional theory. It is argued that institutional-based research is dominated by a narrow set of approaches, largely overlooking institutional perspectives that account for institutional diversity. This paper aims to forward the argument that IB research should lend greater attention to comparing the topography of institutional configurations by bringing political economy “back in” to the IB domain. Design/methodology/approach Using principal components analysis and hierarchical cluster analysis, the authors provide IB with a taxonomy of capitalist institutional diversity which defines the landscape of political economies. Findings The authors show institutional diversity is characterised by a range of capitalist clusters and configuration arrangements, identifying four clusters with distinct modes of capitalism as well as specifying intra-cluster differences to propose nine varieties of capitalism. This paper allows IB scholars to lend closer attention to the institutional context within which firms operate. If the configurations of institutions “matter” for IB scholarship, then clearly, a quantitative blueprint to assess institutional diversity remains central to the momentum of such “institutional turn.” Originality/value This paper provides a comprehensive survey of institutional theory, serving as a valuable resource for the application of context within international business. Further, our taxonomy allows international business scholars to utilise a robust framework to examine the diverse institutional context within which firms operate, whilst extending to support the analysis of broader socioeconomic outcomes. This taxonomy therefore allows international business scholars to utilise a robust framework to examine the institutional context within which firms operate.