Institutional theory-based studies on firms from developed economies entering emerging economies are helpful to evidence the impact of both formal and informal institutions elements on the strategies of foreign entrants. However, the number of theoretical and empirical studies using an institutional perspective to study internationalisation strategy of developed countries firms in south Mediterranean countries are still limited. The purpose of this study is to provide an understanding of institutional contest influence on internationalisation strategies in emerging economies. We developed a framework combining normative and cultural factors affecting internationalisation strategy. A set of hypotheses was generated from this framework and empirically tested on a sample of Italian firms operating in Egypt through face to face interviews. Our research suggests that institutions are much more than background conditions, that institutions directly determine what arrows a firm has in its quiver as it struggles to formulate and implement strategy and to create competitive advantage especially in emerging economies.
Keywords: cross-cultural management, internationalisation, emerging economies