No Man is an Island, and Neither is Any Firm

All firms compete and survive in an institutional environment. This institutional environment contains rule, regulations, and norms. By adhering these rules, regulations, and norms, firms gain legitimacy and assure their stakeholders. Sometimes these institutional forces are quite enduring, especially if they emerge within an industry. And that is the case for the film industry. The established studios are relying heavily on these institutional forces to hang onto their grasp as the center of the industry.

Institutional environment can also come in the form of supporting infrastructure. The development of an industry center does not occur just because of the existence of talents, or just because of the abundance of other resources. The fact that viable innovations often miss the chance to be commercialized in former Soviet Union and now Russia is a case in point. The long-term viability of an industry center depends on the development of an infrastructure that bring together resources and nurture regeneration of resources. The existence of research universities, supportive policies and regulations, and efficient interorganizational networks are examples of such infrastructure. Without infrastructure, the development of an industry structure is not sustainable.