The fields of international business (IB) and international management (IM) are concerned with business activities transacted by firms across national borders, the interactions between firms and other organisations, how these activities are managed, and the consequences that arise from these phenomena. Institutions – largely taken-for-granted, culturally-embedded understandings of appropriate social arrangements and behaviours – have been central to this heritage. Early perspectives in IB/IM emphasised the power of institutions to determine patterns of action and organisation, thereby explaining the convergence of MNEs and managerial practices within the same institutional environment. That is, firm and individual behaviours were viewed as being shaped and constrained by pre-existing formal and informal institutions that reside at the country or international levels of analysis (e.g. laws, intellectual property rights protection regimes, financial market institutions, dimensions of national culture). Particularly prominent are studies that examine countrylevel institutions, how institutional environments determine the most effective strategies and structures for a diversity of firms, how institutions facilitate or impede the diffusion of organisational practices throughout MNEs, and the institutionaltransformation of transition or emerging economies and its impact on firms.

Institutions, however, do not only constrain, but also are outcomes of human agency (i.e., purposive action by individuals, firms, coalitions, and other actors). Hence, organisational actors are not only bound by institutions, but also enact and reconstruct them. As a corollary, the role that organisations and individuals play in institutional creation, maintenance and change has come to the fore in academic debates, albeit primarily outside IB. The recent concept of ‘institutional entrepreneurship’, whereby actors purposefully mobilise resources to create new institutions or change existing ones for their own interests (DiMaggio, 1998), is illustrative of this shift towards active agency in an institutional context. Similarly, agency is central to co-evolutionary perspectives that connect patterns of institutional change in wider business systems with more micro processes of, for example, variety generation, experimentation and sensemaking within and across individual firms. The substantial institutional contradictions inherent in the international business environment bring to the fore opportunities for agency. This distinctiveness of the international business environment invites longitudinal process-oriented studies. It also holds potential for stronger theory testing and building at the intersection of institutions and agency, and eventually the export of new or refined theories from IB scholarship to adjacent fields and disciplines.

Accordingly, through this special issue we sought to encourage in IB research the more nuanced view of the nexus between agency (as purposeful action) and institutions (of different kinds and residing at various levels of analysis) that we perceived to be emerging. In this introductory essay, we first briefly elaborate thedevelopment of research in IB concerning the interplay of institutions and agency and point to gaps in our knowledge. We suggest that recent developments from adjacent fields offer a theoretical foundation for further insights into the nexus of institutions, agency and co-evolution. In particular, we discuss the concepts of institutional work (Lawrence & Suddaby, 2006) and institutional entrepreneurship (DiMaggio, 1988), and refer to representative literature on these topics from both within and outside the field of IB. This sets the stage for our discussion of how the papers that appear in this special issue further develop and expand our understanding of institutions, agency and co-evolution. We conclude by offering questions and directions for future research.