Abstract

Europe, and in particular the European Union, has integrated both politically and economically over recent decades (see Butt-Philip, Chapter 14 in this volume). However, it remains a continent consisting of 50 sovereign states with their distinct institutional characteristics. This institutional heterogeneity can impose major challenges for firms entering or operating in different European locations (cf. Jain et al. 2016; Kim and Aguilera 2016). Indeed, researchers have demonstrated that, in general, the performance of international firms is dependent on the surrounding institutional conditions and on their ability to adapt to different locations (e.g. Christmann et al. 1999; Makino et al. 2004; Chan et al. 2008). In this chapter, I discuss the institutional heterogeneity of Europe as a market area by building on complementary streams of literature on the subject. In so doing, I shall specify a related set of challenges for firms’ international activity in Europe.