What is the institution-based view focused on?

The institution-based view is focused on the rules that govern business operations, which include formal regulations, laws, and informal norms and practices within a certain environment. This perspective emphasizes that the behavior and performance of organizations cannot be understood in isolation from the institutions that shape them. It integrates understanding how various institutions, such as legal systems, government policies, and social norms, influence the ways businesses operate in different contexts.

By examining these governing rules, the institution-based view recognizes that businesses must adapt their strategies and processes to align with the institutional frameworks present in their operating environments. This alignment can lead to competitive advantages or challenges depending on how effectively a firm navigates these governing structures.

In contrast to the other options, which focus on cultural factors, financial performance, or specific strategies used by firms, the institution-based view takes a broader perspective that encompasses the regulatory and normative foundations that impact business behavior on a larger scale.