Dragons with Horsepower: Learning about the Internationalization Process of Emerging Market Firms

Abstract

While there are many examples of large multinational enterprises (MNEs) that have acquired local national firms in markets where they want to enter or further expand, there is less research focusing on how local and national firms choose to acquire large MNEs as a strategy for internationalization. To be able to compete in emerging markets and to internationalize out of these, firms make strategic choices that are different from those prescribed in traditional behavioral models of MNEs (Aulakh and Kotabe 2008; Lu et al. 2014; Meyer et al. 2009). Supposedly new categories of internationalized firms emerge in relation to traditional explanations and the current understanding of international business is challenged (Xu and Meyer 2005). For instance, through the acquisition strategy, where local firms from an emerging market acquire an existing internationalized firm, a new dimension to Johanson and Vahlne’s (2009) concept of “liability of foreignness” and “liability of outsidership” arises. This is especially so when the acquisition relates to an internationalized firm from a developed market.