Final answer:
The institution-based view posits that firms' successes and failures are shaped by 'rules of the game' set by institutions. This perspective is grounded in the liberalist institutionalism that underscores the significance of institutions in international relations and business strategy.
Step-by-step explanation:
An institution-based view of a firm's strategy suggests that both the success and the failure of firms are heavily influenced by the formal and informal 'rules of the game,' which include regulations, standards, norms, and conventions that constrain, shape, and guide behaviors within a given institution.
This view aligns with the principles of institutionalism within liberalism in international relations theory, emphasizing the role of institutions in setting the context for state behavior. It contrasts with the resource-based view, which focuses on the internal resources and capabilities of the firm as the main drivers of competitive advantage. In the context of international business, the institution-based view recognizes the importance of understanding and navigating the complex web of local and global institutions.