Abstract: Based on the institutional theory, this paper takes the foreign banks operating in China from 2007 to 2013 as the samples to discuss the impact of institutional distance on the disadvantages of outsiders. It also analyzes the adjusting effect of the isomorphism, with which subsidiaries are imitating the host enterprises, on the relationship between the institutional distance and the disadvantages of outsider. The results show that there is a significant positive correlation between the institutional distance (including regulating distance, cultural distance and economic distance) and the disadvantages of outsiders. The simulated isomorphism is negatively adjusting the positive relationship between regulating distance, cultural distance and disadvantages of outsiders, but its adjusting effect is not significant on the relationship between economic distance and disadvantages of outsiders.

Key words: institutional distance; disadvantages of outsider; isomorphism; adjusting effect