A co-evolution perspective of EMNE internationalization and institutions: An integrative framework of 5Cs

While significant progress has been made on the contextual role of institutions, scholarly research on the dynamic process of emerging economy multinational enterprises’ (EMNEs) international activities interacting with home country and host country institutions still seems to be in its infancy. Therefore, in order to move the current academic debate forward, we examine the intersection between the internationalization of EMNEs and their institutional environments by undertaking a critical review of the existing literature, given that institutional forces not only shape organizational behavior but also affect EMNEs’ internationalization strategies and organizational outcomes. We propose an integrative framework of 5Cs (context, capability, change, concomitance and configuration) underlying the co-evolution of EMNEs’ internationalization and institutions, and position all the papers included in this Special Issue within this framework in order to point towards a number of directions for future scholarship.     

Impact of international entry choices on the nature and type of innovation: Evidence from emerging economy firms from the Indian bio-pharmaceutical industry

As emerging economy multinational enterprises (EMNEs) enter foreign countries in search of new markets, seeking to expand their knowledge bases, research on the type and nature of innovation activity is needed to address the impact of EMNEs’ choices related to international expansion. Building on prior literature on entry mode and location choices, as well as on organizational learning, we argue that how and where an EMNE expands internationally will impact the nature of its innovation. We carry out empirical analysis on a sample of 167 Indian bio-pharmaceutical firms for the period from 1997–2017. Our findings suggest that greenfield ventures foster innovation in core technologies, while cross-border mergers and acquisitions (M&As) foster innovation in non-core technologies. In addition, locating subsidiaries in high income countries encourages product innovations, while locating in low income countries encourages process innovations. Our findings contribute to the growing literature on differences in learning outcomes of EMNE internationalization.     

Following their predecessors’ journey? A review of EMNE studies and avenues for interdisciplinary inquiry

In this review article we take stock of international business (IB) research on emerging economy multinational enterprises (EMNEs) over the past three decades. Our review covers 690 articles published in 64 high-impact peer-reviewed journals between 1990 and 2021 (inclusive). We first present bibliometric findings on some key patterns of this vast body of scholarly work. We then conduct content analysis to critically assess this literature and provide a multilevel synthesis of the existing knowledge base. To do so we propose a theoretical framework that highlights three dimensions – micro-foundations, organizational characteristics, and institutional environment – by which the distinction between EMNEs and their predecessors, namely multinational enterprises (MNEs) from advanced economies, is investigated. At each level, we seek to understand EMNEs’ convergence with and divergence from their predecessors in terms of their motives, strategies/approaches, and outcomes of internationalization. Through this process we identify opportunities to move EMNE research forward through interdisciplinary inquiry, and we propose several avenues for future research.     

The autocratic advantage: Internationalization of state-owned multinationals

We offer a theoretical extension and empirical analysis of home country autocracy as a key determinant for the internationalization of state-owned enterprises (SOEs). Building on international business and international political economy theory, we argue that the pursuit of a mercantilist domestic agenda by autocratic governments is influential upon the magnitude and direction of state-owned multinational enterprises’ (SOMNC) outward investment via acquisition. We conclude that autocratic home countries are ‘re-purposing’ SOEs to pursue international nationalist objectives – and that autocracies can do so more effectively and purposefully than democracies, by maintaining effective control over their SOMNCs.     

The role of experiential and non-experiential knowledge in cross-border acquisitions: The case of Indian multinational enterprises

This paper investigates the antecedents of the internationalization of emerging economy multinational enterprises (EMNEs) through cross-border acquisitions. Using a panel data set of 1138 cross-border acquisitions made by 515 Indian multinational enterprises (MNEs) during 2000–2013, it examines interactions of in-house resources with experiential and non-experiential knowledge to explore how EMNEs manage and exploit their knowledge base when internationalizing. The results show that Indian multinational enterprises have ‘interface competence’. They combine in-house resources with experiential market and externally sourced technological knowledge for undertaking cross-border acquisitions. The Uppsala model provides insights in analyzing the role of market knowledge and the Global Factory model helps in analyzing the role of technology in cross-border acquisitions by EMNEs.     

Strategic ambidexterity and its performance implications for emerging economies multinationals

Emerging market multinational enterprises (EMNEs) are attracting significant scholarly attention in the international business and general management domain. The extant research has provided important insights into the EMNEs’ internationalization processes and whether the existing theories adequately explain their outward investment motives. This special issue aims to provide a platform suited to extend the current understanding of the rapid rise of EMNEs and examine the vital role played by strategic ambidexterity and its performance implications for the EMNEs. The current research on EMNEs has failed to adequately leverage strategic ambidexterity and link it with the post-entry performance of EMNEs. We argue that the strategic ambidexterity perspective offers valuable opportunities to understand the post-entry performance of EMNEs as they expand into developed and developing markets. The article also highlights important areas for future research by taking into account the current COVID-19 pandemic crisis.     

Liabilities of origin and its influence on firm's corporate social performance? A study of emerging market multinational corporations

This study draws upon the institutional-based view to examine how home country institutional voids affect the corporate social performance (CSP) of emerging market multinational corporations (EMNCs). We propose that home country institutional voids of EMNCs are positively related to CSP. We also argue that EMNCs' internationalization and visibility will further augment the above relationships. We tested our hypotheses using a sample of 89 EMNCs from 10 countries from 2009 to 2018 and found support for our arguments. Our findings show that EMNCs use CSP to overcome the liabilities of origin due to their home-country institutional voids. Internationalization and visibility increase the challenges of origin liabilities and EMNCs respond by enhancing their CSP. Our research adds to the existing knowledge base on institutional voids within the realm of international business.     

Emerging Market Multinationals: Coopetition for Global Growth

Since the dramatic geopolitical shift toward liberalization in the last century, emerging‐market multinational enterprises (EMNEs) have become major players in global markets and continue to account for an increasing share of global foreign direct investment (FDI) flows. Given this trend, the questions of how and why EMNEs pursue FDI deserve greater attention. This article builds on recent work that uses resource dependence theory (RDT) to explain EMNE internationalization strategies. We propose that EMNEs, while often resource deficient relative to their developed‐market competitors and, therefore, more dependent on others in the external environment, are uniquely positioned to overcome these deficiencies over time through simultaneous cooperation and competition—coopetition—with their global rivals and host‐ and home‐country governments. These propositions contribute to the EMNE internationalization literature by more fully incorporating RDT into current theories of internationalization, highlighting the importance of managing dependencies over time to maximize global growth. © 2015 Wiley Periodicals, Inc.     

Emerging market multinationals’ firm-specific advantages,institutional distance,and foreign acquisition location choice

How do emerging market multinational enterprises’ (EMNEs’) firm-specific advantages (FSAs) drive their foreign acquisition location choice? We theorize EMNE FSAs as important contingencies influencing the effect of institutional distance (ID) on EMNE foreign acquisition location choice. As a baseline main effect, we expect ID to positively influence EMNE location choice, as well-developed institutionally distant host-country environments are attractive to EMNEs. This effect is reduced by EMNE FSAs shaped by home-country conditions, such as success in navigating institutional voids and superior human resource management, which are more competitive in institutionally closer countries. Conversely, this effect is heightened by EMNE FSAs shaped by investment choices for knowledge and for international venturing. Based on analyses of 278 EMNE acquisitions by EMNEs from nine emerging markets, our findings largely support our hypotheses. Our study extends research on EMNE FSAs, which often have been compared only with those of developed-country multinational enterprises.     

Research on emerging-market multinational enterprises: Extending Alan Rugman’s critical contributions

We summarize Rugman’s contributions to the literature on emerging-market multinational enterprises (EMNEs) and propose directions to extend his work. We first review his work, where he extended his early research on international business theories to understand the nature, positioning, and activities of EMNEs. EMNEs typically exhibit home-based firm-specific advantages (FSAs) yet lack host-based and non-location-bound FSAs. Most of their sales or assets are focused on the domestic market. Given that the goals of EMNEs may conflict with or complement those of their home or host governments, EMNEs either receive government support or face regulatory barriers. We propose several directions for further research: investigating the mechanisms (e.g., international acquisitions) through which EMNEs develop strong FSAs, exploring the strategy and performance of state-owned EMNEs (vs. private EMNEs), and constructing comprehensive datasets to test the strategy and performance of EMNEs.     

Liability of emergingness and EMNEs’ cross-border acquisition completion: A legitimacy perspective

This paper contributes to the literature on emerging multinational enterprises (EMNEs) by revealing how the conditions in their home countries influence their cross-border acquisitions. The study focuses on the liability of emergingness (LOE). It develops an integrative theoretical framework based on neo-institutional theory and the concept of legitimacy to explain the relationship between LOE and EMNEs’ cross-border acquisitions completion and the situational conditions that shape this relationship. The study uses data on 27,648 announced acquisitions conducted by EMNEs from 24 emerging economies in 175 host countries to estimate the relationships. The results reveal that, while two types of LOE (economic and institutional) have negative impacts on cross-border acquisition completion, the negative impacts become less important or disappear when the host country’s unemployment rate is too high, and the host country’s institutional quality is too low. This finding suggests that EMNEs can mitigate the negative effect of the LOE by carefully choosing a good time and a suitable location to enter into these transactions.     

Subsidiary strategy of emerging market multinationals: A home country institutional perspective

We examine the effects of home country institutional factors, namely, home country government support, domestic institutional weaknesses, and state ownership on the subsidiary-level strategy of global integration (I) and local responsiveness (R) of emerging market multinational enterprises (EMNEs). We draw upon the home country institution-based view and the I/R framework to develop our theoretical model. We empirically test our hypotheses using an original new survey data collected from Chinese multinational subsidiary managers supplemented with parent-level and country-level data. We find that home country government support and domestic institutional weaknesses have significant and negative effects on global integration strategy of Chinese multinational subsidiaries. On the other hand, domestic institutional weaknesses push foreign subsidiaries to pursue local responsiveness strategy. Nevertheless, those with greater degree of state ownership in their parent firms are neither willing to disintegrate from their parent firms nor motivated to pursue local responsiveness strategy in order to deal with home country institutional deficiencies and develop new sources of competitiveness in foreign markets. Our findings have advanced the literature on subsidiary strategy in the context of EMNEs, and provide important implications for subsidiary managers and policy makers.     

The internationalization paradox: Untangling dependence in multinational state hybrids

We investigate the internationalization of firms with ownership links to the state from the perspective of resource dependence theory, and argue that internationalization can reduce dependence on the home country government, but, paradoxically, this strategy also creates additional dependences, shifts the power balance, and provides rationales for increasing government control. Utilizing a ‘critical’ case – Vale from Brazil – we analyze different conditions that enable greater autonomy for and greater government control over multinational state hybrids in the context of internationalization. We contribute to the international business literature by generating a novel framework that considers the effects of market trends (extractive industry) and non-market trends (home country policies) on the internationalization of state hybrids.     

Willingness to work for multinational enterprises from emerging countries: The case of Chinese multinational enterprises in the Netherlands

How do perceptions of country-of-origin image (COI) relate to willingness of Western people to work for subsidiaries in advanced countries of multinational enterprises from emerging countries (EMNEs)? We seek to shed light on this question by exploring six hypotheses based on environment-processing metatheory. Applying a PLS-SEM analysis of online survey data from the Netherlands, we find that the COI and familiarity with the EMNE’s home country are positively associated with willingness to work. Additionally, we reveal a few mediating effects indicating that familiarity and individual difference are indirectly related to willingness to work. This study contributes to our understanding of the inability of EMNEs to attract talent in the Western world by adding a macro perspective to the human resource management literature. Furthermore, we extend environment-processing metatheory by expanding the focus from the perceived internal context (corporate information) to the perceived external environment (country of origin), as well as to the antecedents (familiarity and individual differences) of the perceived environment.     

Rapid internationalization of emerging market firms—The role of geographic diversity and added cultural distance

In this study, we examine drivers of internationalization speed of emerging market multinational enterprises who have been known to internationalize rapidly, even to culturally distant countries. Drawing on the organizational learning theory, we argue that, devoid of a pre-existing knowledge base before they begin their international expansion, these firms are unencumbered by the pathologies and traps that are likely to slow a firm with pre-existing knowledge. We posit inverted U-shaped relationships between geographic scope and added cultural distance on the one hand, and internationalization speed of Indian software multinationals, on the other hand. We also hypothesize a moderating effect of the regularity of added cultural distance on the relationship between added cultural distance and internationalization speed. Our analyses of 650 internationalization expansions of 32 largest Indian software firms over a ten-year period support our hypotheses.     

Internationalization of emerging-economy new ventures: The role of within-country differences

New ventures are increasingly internationalizing from emerging economies, but the role of their home country and any associated within-country regional differences are not well understood. In this article, we look at a new venture in China and how its headquartered region promotes its internationalization. We present empirical evidence that shows the interrelatedness between a venture’s region and internationalization: When institutional development in a region is strong, the impact of foreign firm presence on venture internationalization becomes even stronger. We discuss implications for managers of multinational enterprises and new ventures operating in emerging economies as well as policymakers in these economies.     

International investors’ reactions to cross-border acquisitions by emerging market multinationals

How do international investors react to announcements of cross-border mergers and acquisitions (CM&As) by emerging market multinational enterprises (EMNEs)? Using a unique and manually-constructed firm-level dataset, this paper examines the stock price reactions to CM&A announcements made over the period 1991–2010 by Chinese MNEs listed on the Hong Kong Stock Exchange and the wealth impacts of their corporate governance. Our empirical findings confirm a positive stock price reaction on average, and suggest that international investors react positively to the presence of large shareholders, but negatively to the presence of institutional shareholders. There is a negative impact if the largest shareholder is either the State or the corporate founder. We suggest that this is because the international investors perceive potential principal–principal conflicts in such ownership/control constellations and discount equity prices accordingly. We also find that Board size and independence have positive effects on the price reaction, but that large supervisory boards engender negative reactions.     

Direction of outward FDI of EMNEs: Evidence from the Indian pharmaceutical sector

This article seeks to add to the small but growing literature of emerging‐market multinational enterprises (EMNEs). Using two linked large firm‐level databases, it seeks to explore the determinants of outward investment of Indian pharmaceutical companies, distinguishing between developed‐ versus developing‐country destinations. It specifically examines the impact of two firm‐level characteristics that embody “non‐OLI” [ownership, location, and internalization] firm‐specific capabilities of EMNEs. The finding of this study is that family firms are keen on investing in other developing countries but much less so in developed countries. However, international linkages in the form of foreign investors offset this. © 2011 Wiley Periodicals, Inc.     

Internationalization performance of Chinese multinational companies in the developed markets

This study investigates the relationship between prior cooperation experience with partners from the developed markets and internationalization performance of emerging multinational companies. Based on the knowledge-based view, this study sheds light on the crucial role of knowledge base, organizational learning in the home country, and acquisition possibility of knowledge in the host country. Employing a sample of Chinese international firms, this study demonstrates that international experience accumulated by learning through linkage with partners from the developed markets improves the performance of companies from the emerging market. Organizational learning in the home country and acquisition possibility of knowledge in the host country moderate the effect of international experience. The implications of these findings for theoretical development and future research are discussed.     

International acquisitions: do financial analysts take note?

Recent research has determined that managers are increasingly concerned with how institutional investors and securities analysts view their companies’ long term strategies. This article examines characteristics of international acquisitions that influence professional stock analysts’ estimates of the acquirer’s earnings per share. Previous international acquisition experience and target country operating experience positively affect analysts’ estimates of stock earnings, and relatedness between the parent and target business lines also affects analyst estimates when viewed in light of operating experience in the acquisition target’s home country.