This dissertation explores the effect of institutional environment on internationalization of emerging economy firms. Based on two streams of institutional theory-- institutional economics and neo-institutional organization theory, this dissertation investigates the institutional motives of internationalization by emerging economy firms from both two institutional perspectives. It includes two models addressing the research topic. Model 1 employs institutional economics theory perspective to examine how macro-level institutional arrangements promote emerging economy firms to go abroad. And model 2 employs neo-institutional theory perspective to investigate how shared norms and values in the institutional environment motivate emerging economy firms to internationalize. In model 1, I propose a dual effect model to examine the influence of both positive and negative features of the macro- institutional arrangement in emerging economies. The research model examines the effect of the dual roles of support and constraint played by the institutional environment of emerging economies. Empirical investigation of 190 Chinese firms with outward internationalization activities demonstrates that both institutional support and institutional constraint promote internationalization activities. The findings indicate that in emerging economies, two seemingly paradoxical institutional forces co-exist to influence internationalization. Moreover, the actual influence of external institutional forces is contingent on internal firm ownership advantages. In model 2, I posit that the internationalization practices of firms are not only driven by efficiency consideration, but also by the desire to conform to institutional isomorphic pressures exerted by the social environment. The impact of three types of institutional isomorphic pressures--coercive pressure, mimetic pressure and normative pressure-- on the intensity of internationalization is investigated. Analysis using survey data collected from 174 Chinese firms shows that all three institutional isomorphic pressures have positive and significant effects on the intensity of internationalization. Also, results suggest that there are interaction effects between institutional isomorphic pressures and firm capability on internationalization. Together, this dissertation shows how internationalization activities of emerging economy firms are motivated by institutional environment. Theoretically, it examines internationalization from institutional perspective, thus offering insights into the different motives of international expansion between emerging economy firms and the developed country. Empirically, it provides firm-level quantitative evidence to institutional effects on internationalization.