Covered in Gold: Examining gold consumption by middle class consumers in emerging markets

As wealth and status rise for middle class (MC) consumers in emerging markets (EMs), they increasingly acquire gold for both consumption and investment. The authors delineate a conceptual map for gold consumption drawing insights from the context of MC in EMs. Perceived benefits of gold and disposable income directly determine the attractiveness and availability of gold for individual consumers. Cultural, institutional and economic factors account for country variations in gold consumption. Based on theoretical considerations and empirical evidence, we contend that gold consumption and disposable income have a curvilinear relationship: as EMs mature and MC consumers’ shopping baskets become more diverse and sophisticated, their gold consumption decreases and eventually stabilizes.     

Instability in the dividend policy of the Istanbul Stock Exchange (ISE) corporations: evidence from an emerging market

Dividend policy behaviour of corporations operating in emerging markets is significantly different from the widely accepted dividend policy behaviour of corporations operating in developed markets. This study provides evidence from the Istanbul Stock Exchange (ISE), an emerging European stock market, and analyses empirically whether the ISE corporations follow stable cash dividend policies in a regulatory environment that imposed mandatory dividend policies. Unlike the empirical results supporting the stable dividend policy behaviour of corporations operating in developed markets, the empirical results show that the ISE corporations follow unstable cash dividend policies and the main factor that determines the amount of cash dividends is the earnings of the corporation in that year.     

How western marketers respond to the new middle class in emerging market cities: The case of Italian fashion marketers

This paper deals with Italian Fashion Marketers (IFMs) expanding internationally through the opening of retail stores. Its main contributions are twofold. Firstly, an explanation is proposed for the reasons that IFMs decide to go international. In particular, it appears they are driven by the search for new customers, specifically among the middle class in emerging markets, where they have the advantage of being able to capitalize on brand equity, such as the Italian origin of their offerings. Secondly, the paper reveals some discernible patterns in new retail store internationalization, pointing out trends and choices in terms of the specific international markets targeted. In this regard, the main countries and cities where IFMs establish and cultivate a retail presence are identified, and comparisons made between emerging vs. developed countries as target markets.Some major implications of the findings are then discussed. In particular, the paper proposes an analysis that aims to contribute to filling a significant theoretical gap in the literature – the rising role of the middle class in urban areas and the potential response of western companies. Some managerial implications for companies engaged in expansion abroad are moreover addressed and six formal research propositions advanced.     

Corporate governance and firm performance in emerging markets: Evidence from Turkey

This is a study of the relationship between context, internal corporate governance and firm performance, looking at the case of Turkey, an exemplar of family capitalism. We found more concentrated ownership, often in the hands of families, led to firms performing better; concentrated ownership means that controlling families bear more of the risks of poor performance. Less predictably, given that the institutional environment is so well attuned to family ownership, we found that mechanisms that accord room for a greater range of voices and interests within and beyond families – larger boards and foreign ownership stakes – seem to also make for positive performance effects. We also noted that increase in cross ownership did not influence market performance, but was negatively associated with accounting performance. Conversely, we found that a higher proportion of family members on boards had no discernable effect on performance. Our findings provide further insights on the relationship between the type of institutions encountered in many emerging markets, internal corporate governance configurations and firm performance.     

The new middle class in emerging markets: How values and demographics influence discretionary consumption

The rise of new middle‐class consumers in rapidly transforming emerging markets has attracted the attention of Western business executives. What they know about this growing segment of customers will determine whether they succeed or fail in these markets. The present study examines the factors that drive the discretionary consumption of this new middle class, including the effects of consumerist values, religious values, occupation, education levels, and ownership of fixed assets. The study draws its insights from data gathered from 391 new middle‐class consumers in Ankara, the second‐largest city in Turkey. The findings provide important implications for businesses, both indigenous and foreign. An overall implication is that managers ought to understand and qualify the new middle class in emerging markets not simply by their access to disposable income but by deeper attitudinal and behavioral characteristics.     

Examining the economic growth and the middle-income trap from the perspective of the middle class

In recent decades, while some countries have been growing consistently, others were not able to keep high growth rates and got stuck in the “middle-income trap.” This study aims to explore the relationship between the middle class and the persistence of economic growth, and understand the role of the middle class in avoiding the middle-income trap which is a serious threat for many emerging markets, yet an understudied topic in the academic literature. Our findings suggest that the key growth factors including the middle class, innovation, productivity, and foreign direct investment have diminishing marginal effect on economic growth. Moreover, the middle class plays an important role in avoiding the middle-income trap. We also find regional differences in the middle-class growth and economic evolution of emerging markets over time. To our knowledge, this is the first study examining the relationships between the middle class, economic growth, and the middle-income trap.     

The neglected need for strategic renewal in emerging markets: Lessons from Vietnam in transition

Research on strategy in emerging markets is based on overly static representations, paying insufficient attention to the impact of contextual change on the value of firms’ resources. This article examines how a sample of the most successful Vietnamese private companies during the first decade of their country's transition from central planning was affected by the shifting rules of the game in their business environment. I suggest the primary takeaway is that sustained superior performance in an environment with changing keys to success requires dedicated and ongoing strategic renewal. I also suggest the need for both scholars and managers to immerse themselves in emerging markets if they care to fully understand the granular ways in which these settings differ from more familiar advanced economies.     

The new middle class in Turkey: A qualitative study in a dynamic economy

Although the middle class phenomenon is a widely investigated topic within a wide range of academic fields such as sociology, political sciences, anthropology, the current study concentrates on the middle class from a marketing perspective in the context of an important Emerging Market—Turkey. The definition we adapt in this study pertaining to the new middle class includes the households that have gained substantial disposable income and have experienced substantial lifestyle changes since the market liberalization reforms which commenced in the 1980s. We first present the importance of the middle class in emerging markets (especially the BRIC), the concept of middle class and the new middle class phenomenon. We then review the literature on the new middle class in Turkey and we explore whether secular and conservative subgroups of the new middle class differ in consumptional and attitudinal dimensions. Finally, we offer preliminary insights based on a qualitative study with 36 new middle class consumers in urban Turkey.     

Differentiation strategies in emerging markets: The case of Latin American agribusinesses

This study furthers the research agenda on Porter's generic strategies by exploring their implementation by firms that suffer from under representation in the literature. It focuses on agribusinesses based in emerging markets that specialize in high value added products. Relying on information collected through interviews, and a survey with 66 agribusinesses based in eight countries of Latin America, it examines the factors that distinguish firms implementing a differentiation strategy (DS). The findings provide interesting insights for scholars and practitioners alike, illustrating the strategic initiatives that DS firms use to ensure they command higher than average prices.     

Performance of professional service firms from emerging markets: Role of innovative services and firm capabilities

Professional service firms (PSF) from emerging markets face a financial dilemma: PSFs tend to utilize high-wage labor, yet their emerging market status makes foreign clients cautious regarding quality and less willing to pay high prices. To allay these concerns, PSFs may be able to develop attractive, highly innovative services, but as the resource-based view (RBV) notes, this requires emerging market firms to possess critical capabilities to support such a competitive advantage. Relying on services theory, we propose that entrepreneurial orientation (EO) of management and expert human capital (HC) are critical capabilities, enabling a PSF to develop and market innovative services profitably. In testing our model on 201 Indian PSFs, we find a mediating role for innovativeness whereby EO and HC drive service innovation which, in turn, accounts for financial performance. Further, we find EO positively moderates the innovative service–performance relationship as proactive, risk-tolerant managers improve foreign marketing. Insights for theory and practice are provided that enable PSFs to overcome the constraints and challenges of their emerging market origin.     

A componovation perspective of innovation in emerging markets: Evidence from Indian organizations

In todays market landscape firms can effectively compete without the benefit of resource advantages, proprietary technology, or market power but by being more aligned towards creative combination and responsive innovation. This study approaches the concept of componovation from the composition based view (CBV) developed by Luo and Child. The CBV emphasizes how firms with ordinary resource endowments can achieve outstanding results through the creative use of open resources and unique integrating capabilities that result in an enhanced speed and a value‐price ratio that are well suited to large numbers of mass market consumers. Thus componovation is a new approach aimed at innovation in emerging markets.     

Challenges and opportunities of new retail horizons in emerging markets: The case of a rising coffee culture in China

Economic growth and a rising middle class consumer base make emerging markets an attractive prospect for many international businesses. Changing patterns of retail in these countries present opportunities for business expansion that many are keen to capitalize on, but also present challenges for reaching their ambitions. This article examines the growth of the coffee shop industry in China—considering its key dynamics and drivers—in order to address questions about successful retail expansion in emerging markets. We aim to explore how changing consumer cultures have contributed to a rapidly growing industry and what strategies businesses have used to enter the market and maintain growth, as well as considerations for potential retail success in the future.     

An empirical investigation of immigrant effects: the experience of firms operating in the emerging markets

The immigrant effect consists of the ‘employer’ and the ‘employee’ effect. This study focuses on the ‘employee’ effect. Existing studies on the immigrant effect have identified its contributions to international trade and international marketing management but have not explained under what circumstances this effect can be used to achieve a firm's objectives when operating in a foreign market. This study explores the profile of the firms which have used this effect to assist their operations in three foreign host markets (China, Hong Kong and Taiwan). Based on the outcomes of a multivariate logistic regression analysis, this study has generated a number of useful findings. Firm size is not suggested as a factor for the selection of immigrant effects. Firms are more likely to adopt an immigrant effect when their products are new to the markets. FDI mode users tend to be more likely to use the immigrant effect. Usage of immigrant effects is also found to be associated with firms from a smaller domestic economy. The immigrant effect is often used to break cultural barriers between home and host markets, but is more helpful when the marketing infrastructure in the home and host markets is similar. The choice of immigrant effect is suggested to have no influence on firms' performance in the host markets.     

Profitable growth: Avoiding the ‘growth fetish’ in emerging markets

Growth management is a challenging but critical corporate strategy facing the fast economic growth in emerging markets. An overemphasis on growth would lead to the growth fetish, where growth is unqualified and seen as an end in itself. By examining the performance of 105,260 firms in key sectors of Brazil, Russia, India, and China (BRIC) from 2002 to 2011, this study presents quantitative evidence that supports a profit-oriented strategy as a more effective path to sustained profitable growth in emerging markets. To further support this argument, this study also provides qualitative evidence of a group of 70 sustained high-performing firms that are superior to their peers (the top 500 private companies in each of the BRIC countries) in terms of profit, growth, market share, and efficiency over a 10-year period. The study shows that sustained profitable growth requires qualified sales growth (i.e., organic growth), competence-based and competence-enhancing growth, and continuous product diversification.     

Performance implications of institutionalization process in family-owned businesses: Evidence from an emerging economy

This paper attempts to understand the role of two highly relevant founder family characteristics, harmony among family members and the degree of democratization in decision-making, in the institutionalization and adaptive capability development processes of family firms in Turkey as an exemplar of an emerging market. The paper examines how institutionalization and adaptability jointly drive firm-level differences in quantitative (i.e., sales growth, market share, and return on investment) and qualitative performance (i.e., quality of goods/services, new product development, employee satisfaction) components. Data were collected from 436 respondents in 132 family firms through structured questionnaires administered to at least three respondents from each firm. Findings indicated that among the institutionalization dimensions, transparency had the strongest effect on both quantitative and qualitative firm performance, whereas adaptability influenced qualitative performance only. Harmony in family relations increased efforts for institutionalization, whereas democracy in decision-making enhanced adaptability. Implications of these findings are discussed and several future research directions are suggested.     

Local contexts as activation mechanisms of market development: contemporary art in emerging markets

The paper studies how local contexts contribute to the emergence of markets. In particular, it explains how potential entrepreneurs are motivated to become active in establishing new markets. Empirically, the focus is on contemporary art markets in two emerging countries: India and Russia. The paper draws upon qualitative interviews with 65 contemporary art dealers conducted in New Delhi, Mumbai, Moscow and Saint Petersburg. We show how different socio-cultural contexts function as activation mechanisms: in India, family backgrounds predominantly structure the decision-making processes, among others through the economic, social and cultural capital which these families provide. In Russia, by contrast, such family background is non-existent. Instead, the socio-economic turmoil of 1990s and 2000s as well as the strong involvement of the state function as activation mechanisms. We suggest that these different activation mechanisms contribute to explaining the diverging market performance in both countries.     

Applying the scenarios method to capture uncertainties of retail development in emerging markets

Retail development in emerging markets has been the result of key driving forces operating in a variety of ways leading to unpredictable and complex patterns of retail change. Existing theories of retail change remain inadequate for capturing the complexities inherent in emerging markets. In order to capture the impact of the complex interplay of driving forces on retail change in emerging markets, the authors adopted the scenario method which accepts structural uncertainty and allows for multiple interpretations of multiple futures for the phenomenon under study. An example case study is presented, where four possible visions for retail development in emerging markets in Asia are identified. The four scenarios are firstly, a scenario where Traditional Retailers dominate through mom and pop stores, a second one where Regional Retailers dominate, a third one where Discounted Retailers dominate and a fourth where Mixed Retailers gain predominance. The scenarios highlight that the politics of retailing give rise to new conventions of competition in emerging markets, which sustain the coexistence of a variety of retail formats in these markets. The scenarios approach demonstrates that the nature of consumer behaviour rooted in traditions and customs alongside rising aspirations sustains a dual model of retailing in emerging markets. The paper concludes with reflections for retail development theory and implications for practitioners and policy-makers.     

Asymmetric Post-Announcement Drift to Good and Bad News: Evidence from Voluntary Trading Disclosures in the Chinese Stock Market

This article investigates the post-announcement drift (PAD) of stock returns in the Chinese stock market. We use a sample of voluntary trading disclosures to test the hypothesis that an asymmetric PAD exists in a market in which managers are more likely to suppress negative news. We show that a pattern of short-term momentum and long-term reversal in returns persists for up to 250 trading days following the announcement of trading statements in the Chinese stock market. This finding is stronger for positive announcements in terms of the magnitude and the variance of stock returns. Our findings are in line with both Shin’s theoretical predictions and the credibility hypothesis, in which disclosure and asset returns are jointly determined and the adoption of a “sanitisation strategy” in information disclosure generates more volatile returns for firms issuing good news. Further, we show that the latter effect is more pronounced for firms which are partially state-owned, suggesting that they potentially receive more government support, a finding which is in line with the hypothesis that the incentive to suppress negative information is related to a country’s legal/judicial system.     

Ostentation and funk: An integrative model of extended and expanded self theories under the lenses of compensatory consumption

In the last decade, economic growth have created in Brazil and other emerging countries a ‘new middle class’, a group that left the poverty line and entered the consumption markets. In this scenario, a musical movement with many traces of this ‘new middle class’ has emerged. Known as Funk Ostentação (ostentation funk), the movement is formed by young singers whose lyrics and promo videos refer to the consumption of designer's clothes, cars and aspirational products. We have studied Funk Ostentação by means of its promo videos, personal interviews and a group discussion with its fans (young adults) and found meaningful relations between consumption and identity building. We developed a framework that integrates the extended and expanded self theories under the lenses of compensatory consumption. This framework can be applied to studies with other groups that have similar characteristics of vulnerability with other niches of the ‘new middle class’ in emerging markets.