Towards the co-evolution of multinationals' and local firms' global strategies in an uncertain environment: Insights from International Joint Ventures

Abstract

Multinational firms invest in countries characterized by heterogeneous markets and develop different activities to face uncertainty in those markets. This uncertainty can be caused by economic, political, or institutional conditions. Research in international business analyzed multinationals' (MNCs) global strategies and local firms' behaviors in isolation. This study fills a gap in the literature by addressing the co-evolution between MNCs' and local firms' global strategies through the creation of International Joint Ventures (IJVs). This study investigates how, in an uncertain context, strategic orientation and flexibility contribute to the co-evolution of global strategies between multinational and local firms. Based on a qualitative approach, five IJVs between MNCs and Tunisian small and medium-sized enterprises operating in the agri-food sector are studied. Based on 46 semi-structured interviews with the main actors of the IJVs, the results revealed that the strategic co-evolution between MNCs and local firms leads to superior adaptation to an uncertain environment combining proactive flexibility and a dual strategic market-entrepreneurial orientation. Our research provides new insights about the various drivers of co-evolution between MNCs and local firms and their abilities to address the uncertainty of the environment.