Spotting and Responding to Institutional Voids: Identifying Opportunities in Emerging Markets

By: Krishna G. Palepu and Tarun Khanna

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Synopsis: The trick to defining and executing business strategy in emerging markets? Identifying the key institutions missing from developing economies-like absent or unreliable sources of market information, an uncertain regulatory environment, or inefficient judicial systems-and building businesses that will help fill those voids. This chapter, from the book "Winning in Emerging Markets" by two experts in the field, equips managers with toolkits to spot and respond to institutional voids in product, labor, and capital markets, and the resulting obstacles and business opportunities. These toolkits provide a series of questions that will help you avoid easy-to-anticipate mistakes and identify unexpected sources of competitive advantage-whether yours is a foreign or domestic organization. This chapter was originally published as Chapter 2 of "Winning in Emerging Markets: A Road Map for Strategy and Execution."