No place like home? How EMNCs from hyper turbulent contexts internationalize by sequentially arbitraging rents,values, and scales abroad

Combining historical and longitudinal comparative case methodologies for nine nascent EMNCs over 12 years, we explain how their evolving relationship to a hyper turbulent home country motivates largely unplanned yet aggressive internationalization. Firms progressively mitigate the damaging effects of their rapidly deteriorating home context by pursuing a sequence of three institutional arbitrage modes. They first arbitrage rents to stabilize their rocky domestic operations, then arbitrage values to safeguard their threatened core identity, and finally arbitrage scales to transcend their limited growth prospects. The induced stepwise process of internationalization yields similar patterns for purely domestic firms, exporters, and foreign direct investors.     

Emerging market multinationals’ role in facilitating developed country multinationals’ regional expansion: A critical review of the literature and Turkish MNC examples

The recent expansion of emerging market multinationals into world markets has generated a rich literature. While this literature has addressed the potential motivations, behaviors, and strategic implications of these firms’ moves abroad, their possible role as facilitating agents in regional expansion has not been adequately explored. In this paper, we explore this question through a critical review of the literature and examples from Turkish multinationals. We also offer questions for future research.     

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.     

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.     

Emerging market multinational companies’ evolutionary paths to building a competitive advantage from emerging markets to developed countries

One significant emerging phenomenon of global competition is the increasing number of Emerging Market Multinational Companies (EMNCs) that have survived and succeeded in the constraining institutional environments in their home turfs and are now participating in the global marketplace. However, despite the growing literature, our understanding of the factors that influence EMNCs’ competitive advantage is limited. We conduct a historical longitudinal analysis of sixteen companies originating from key emerging markets viz. India and China. Our findings suggest that EMNCs’ evolutionary paths to building competitive advantage from their home market to the developed countries is, on one-hand, based on the EMNCs’ ability to acquire resources and absorb them to build their own advantage. On the other hand, it is also based on EMNCs’ ability to find new market niches and to enhance their innovation capabilities to overcome the liability of emergingness.     

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.     

Relevant knowledge and recipient ownership: Chinese MNCS’ knowledge transfer in Africa

This paper examines emerging market multinational corporations’ (EMNCs’) knowledge transfer (KT) in emerging markets using case studies of Chinese MNCs (CMNCs) in Africa. CMNCs are found to transfer “relevant knowledge”, existing knowledge reconfigured so that recipients can apply it more effectively with less effort in the new context. Relevance is ensured through recipients exerting ownership of the KT process, influencing what knowledge is transferred and how it is transferred. We summarise EMNCs’ KT process in a “relevant knowledge recipient ownership model”. The model contributes to KT theory by refining and empirically testing a new type of knowledge – relevant knowledge – and a new transfer model – recipient ownership – associated with EMNCs. It leads to a “relevance-based view” in which EMNCs’ competitive advantage in emerging markets is significantly enhanced by knowledge relevance rather than superiority. This contributes to a better understanding of EMNCs’ competitiveness in emerging markets as created from distinct characteristics of their relevant knowledge (applicability, assimilability, affordability) and recipient-driven transfer (selection, scrutiny and synthesis).     

How Have the Emerging Stock Exchanges in Africa Responded to Market Reforms?

Abstract

In this paper, we focus on how the stock markets in Africa have responded to the reform process. We identify three main types of reforms implemented in these markets since the 1990s, namely revitalization of the regulatory framework, modernization of trading systems, and relaxation of restrictions on foreign investors. We invoke market microstructure theory to hypothesize the expected response of the markets in terms of efficiency and volatility to the three types of reforms. Econometric methods are applied to test the hypotheses on a sample of ten stock exchanges, for the period 1988:01-1999:12. The evidence generally suggests that there are benefits of investments to improve market microstructure. For example, a comparative analysis across the sample demonstrates that markets with advanced trading technology, tight regulatory system and relaxed foreign investors' participation show greater efficiency and lower market volatility. Although direction of causality between efficiency and volatility varies across the markets, in general, we infer that reforms, which reduce volatility, reap higher efficiency. However, in some markets, the effects of the reforms are too recent to show any clear response pattern.     

跨国零售企业中国市场营运模式比较及启示

纵观跨国零售企业中国市场的营销运作,显现出创新的竞争作为和卓越的竞争成效,因而有必要关注跨国零售企业中国市场营销个性的差异,尤其需要研究其营销共性的特征,将其营销运作模式进行对比分析,提炼核心能力的基本框架,把握核心能力关键所在,探索零售企业核心能力与行业竞争态势、目标市场竞争环境、以及总体竞争趋势的关联度,寻求我国零售企业跨入国际市场参与竞争的借鉴之路。     

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.     

DIY: How internationalization shifts the locus of indigenous innovation for Chinese firms

We elaborate theories of indigenous innovation by explaining how internationalization choices help emerging market firms transition from dependence on external knowledge to self-reliance on internal knowledge. Using a 1998–2007 census dataset of Chinese manufacturing firms, we theorize and test the moderation effect of foreign equity and export orientation on the relationship between knowledge and indigenous innovation. We show that foreign equity dis-incentivizes, while export orientation incentivizes, investments in internal knowledge. We contribute by showing that internationalization choices may radically change indigenous innovation outcomes by shifting the locus of problem solving outside or inside the firm. Our study corroborates the negative direct and indirect effects of external knowledge on indigenous innovation at the firm level previously suggested by China-centric scholars but also shows how two types of internationalization choices may gradually relieve firm-level dependence on imported technology. We bridge the gap between Western research and Chinese thought and practice by introducing a do-it-yourself (DIY) explanation of how firms may implement China’s indigenous innovation (zizhu chuangxin) policy.     

How valuable is information and communication technology? A study of emerging economy enterprises

Anchored at the knowledge management perspective, we address how information and communication technology (ICT) improves the productivity of emerging economy enterprises. We present the logic that ICT enhances firm performance because it is an important channel or facilitator of effective knowledge sharing and knowledge integration. We further argue that the conditions characterizing an emerging economy (i.e., a country’s economic development) and emerging economy businesses (i.e., internationalization and quality assurance) would affect the extent to which ICT contributes to knowledge management, and thus to firm performance. Our hierarchical linear modeling analysis of 6236 firms from 27 emerging economies lends support to our arguments and predictions, suggesting that ICT is a critical investment that generates satisfactory returns for emerging economy enterprises, yet this investment–return relationship is further contingent upon the macro- and micro-level conditions facing these enterprises. ICT actually adds more value to productivity when a focal emerging economy is less economically developed, and when a focal firm reaches foreign markets or its quality control and assurance is superior.     

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.