The Expansion of Emerging Economy Firms into Advanced Markets: The Influence of Intentional Path‐Breaking Change

Abstract

Existing literature has investigated the drivers behind the expansion of emerging market firms into other emerging markets, but we are only beginning to understand how emerging market firms expand into more advanced markets. Grounding our arguments in institutional theory and the notions of managerial intentionality and path‐breaking strategies, we argue that emerging market firms can intentionally pursue path‐breaking changes that set them on an organizational path better suited to advanced market conditions, by listing their stock on advanced financial markets or divesting unrelated business. We test our arguments on a sample of 855 emerging market firms from 18 countries over a six‐year period. Our results strongly support our argument that emerging market firms can intentionally change their organizational paths and develop the ability to expand into advanced markets.