A Supply Chain Perspective on Strategic Foothold Moves in Emerging Markets

Abstract

Emerging markets present intriguing growth opportunities, but they are often extremely risky for foreign entrants. Given this riskiness, companies entering emerging markets may establish strategic footholds—small positions that they can later choose to expand (referred to as an attack) or abandon (referred to as a withdrawal)—rather than making costly large‐scale entries. While scholars have begun to examine the competitive dynamics surrounding footholds, the influence of the supply chain has not been considered. This is surprising given that supply chains are key to the daunting task of meeting emerging market demands. To build on extant research, we theorize about how environmental uncertainty (e.g., stemming from factors such as poor infrastructure and political unrest), foothold portability (i.e., how easily the foothold resources can be redeployed in the firm's supply chain), and supply chain knowledge influence (or should influence) firms’ decisions about footholds. This represents a needed step forward in understanding the central role of supply chains in foothold maneuvers in emerging markets. In taking this step, we posit that firms must consider both competitive dynamics and their supply chains or they risk over/under estimating the viability and value of their footholds.