This thesis explored changes in the international business (IB) environment as a co-evolution of institutional complexity and multinational enterprises (MNEs). Institutional complexity refers to the often contradictory and overlapping pressures from the business environment that require a response from an MNE. Co-evolution on the other hand refers to a perspective that views changes in the business environment as arising from the interaction of two or more jointly evolving entities, the institutional complexity and the MNE in this study. The interaction of MNE and its’ environment has been the focus of the MNE embeddedness studies. Earlier research on this has focused on understanding the influences of the multiple contexts of MNEs and the types of responses MNEs have in the form of strategies and structures. Although we have gained valuable insights from earlier studies, we need to further understand the complexity of changes in the business environment. Thus, this study focuses on the interplay between MNEs and institutional complexity. 

This study concentrates on industry-level changes and their linkages to global and organisational developments. Empirically the study focuses on the transformation of the pharmaceutical industry. The industry has emerged from a simple craftsmanship type of business into a high-technology industry dominated by MNEs with a global presence. As a highly institutionalised environment, the pharmaceutical industry offers an interesting context for studying contextual complexity on an industry level. The pharmaceutical industry is strongly regulated at nearly all levels of operations, limiting companies' legitimate strategic options. In addition, this industry has relatively stable structures and well-defined actors. Therefore, it can be viewed as a mature sector, offering a different context for study compared with more traditional institutional studies in IB focusing on emerging markets in which regulative institutions are usually underdeveloped.

This study applied a multi-methodological approach by triangulating three methodologies. First, stemming from the need to understand change at multiple levels, the study applied a historical research approach to examine past events and identify change trajectories of institutional complexity. Second, to examine the variety of institutional complexity, the thesis applied a qualitative comparative analysis focused on the present characteristics of institutional complexity at the industry level. Third, to investigate institutional change as a co-evolution in multiple related industries, the thesis applied futures research tools and aims to further understand the different elements of institutional change.

As its main theoretical contribution, this study presents a co-evolutionary model of institutional change building from the interaction between changing institutional complexity and MNEs. The findings illustrate that in this co-evolutionary process, the varieties of institutional complexity offer different types of opportunities for agency. This brings forward a more integrated view of institutional change. Furthermore, the study extends the current knowledge on embeddeness of MNEs and provides further analytical tools to enrich contextuality in IB studies. The study also has important implications for managers and policymakers, enabling them to make more informed decisions and to navigate complex institutional environments better.