Introduction: the rise of internationalizing firms from emerging markets

Abstract

The rise of emerging markets (EMs) in the new world economic order is perhaps the most significant international business phenomenon today. Khanna and Palepu (2010) explain this by the meteoric rise of these economies, fueled by rising expectations of their burgeoning middle classes creating new markets for every product; their large and lowcost but welleducated labor pools, and high technological and managerial skills; and the growing entrepreneurial classes in them pursuing opportunities for innovation and prosperity. It is clear that the confluence of rapid globalization and technological advances has kindled a revolution in EM consumers to actively participate in the emerging global consumer culture and has energized their firms to partake in the many roles that make up global value chains. The outward foreign direct investments (OFDIs) of EM firms – such as Haier, Baosteel, Huwai Technologies and Lenovo (China); Tata, Ranbaxy, Wipro, and Infosys (India); Embraer and AmBev (Brazil); Gazprom (Russia); SAB Miller (South Africa); Arcelik (Turkey); Teva (Israel); and Cemex (Mexico) – have sometimes outpaced those of their developed economy counterparts, reversing the decadeslong foreign direct investment (FDI) trends of the past century. While the expansion of EM internationalizing firms (EMMNEs) has been studied in the past, for instance by Lecraw (1977), Wells (1983) and Lall (1983), their study accelerated in the 2000s, inspired especially by the following: Khanna and Palepu (2006 and 2010); Ramamurti and Singh (2009); Meyer (2004); Mathews (2006); Luo and Tung (2007); Sheth (2008); CuervoCazurra and colleagues (for example, CuervoCazurra and Genc, 2008); Buckley and colleagues (for example, Buckley et al., 2008) and Narula (2012). This interest was underscored by special issues of journals dedicated to the study of EM firms’ expansion and even to new journals, such as Emerging Markets Finance and Trade, that have begun to focus exclusively on business in and international business out of EMs. Yet, the study of EM firms’ internationalization remains underdeveloped. This is ironic because EM multinational enterprises (EMMNEs) have