Abstract

Invariably, every market has a set of institutions that regulate and define economic activities. Emerging economies may be developing in a way that integrates and blends traditional practices and beliefs with international conventions and standards. In these economies, like in all others, competing logics co-exist and are used to rationalize the persistence of traditional practices and the institutionalization of reforms. The remarkable characteristic of these markets, specifically due to the increasingly globalizing business, is that they often harbour completely diverging institutional logics, including those integral to Western firms' modus operandi and those of local firms building on traditional practices. A neo-institutional theory based theoretical framework is developed to explore the interaction between society, exerting conforming pressures, and organizations, responding to these pressures. In order to explore the applicability of the developed model, a qualitative field study was conducted. Data was collected by interviewing high ranking officers of Canadian and indigenous firms operating in UAE. Among the research findings, organizational identity was found to moderate firms' strategic choices in response to institutional demands. 'Wasta', a unique local institutional artefact, was found to provide firms leverage in manipulating institutional demands