MNEs from Emerging Economies are Making Lemonade When Given Lemons: Evidences from Indian MNEs

Abstract

Emerging economy multinational enterprises (EMNEs) are gaining prominence in practice and theory. While one group of scholars maintain that the internationalization of EMNEs is same as that of the developed economy multinationals (DMNEs); the opposing group of scholars contend that the contextual uniqueness of EMNEs is not captured by the existing theories of internationalization, thus they need to be amended to explain the motives, processes, and outcomes of EMNE internationalization. We aim to contribute to this debate by providing the evidence from Indian EMNEs and their internationalization process. Based on our analysis of four case studies of recently internationalized Indian MNEs, we find empirical evidence for three types of liabilities faced by EMNEs – liabilities of foreignness, liabilities of multi-nationality, and liabilities of origin. To counter the liabilities, firms engage in a diverse set of actions at the firm level and build their network position in the host country environment, which results in certain advantages and sets in a positive cycle. We propose a conceptual model that explicates the internationalization process, the liabilities faced, and the different types of actions taken by the EMNEs to mitigate these liabilities.