What’s Different About Emerging Markets, and What Does it Mean for Theory and Practice?

Abstract

Much has been written about emerging markets, especially since the term BBRIC^ was coined in by Jim O’Neill [13], then-chairman of Goldman Sachs Asset Management, in his publication Building Better Global Economic BRICs.However, very often, these perspectives have been based on anecdotal observations followed by implications for economic policy and management actions that have not been appropriately investigated. Limited attention is devoted to theoretical underpinnings, corresponding frameworks, and empirical analyses. Additionally, the fact that there is often very little in common between Brazil, Russia, India, and China (and now South Africa) is lost. At the same time, many countries with strong similarities to each of them are correspondingly ignored. Over the past decade, many marketing academics have examined the marketing implications of the differences between emerging markets (EMs) and developed markets (DMs), as well as the market phenomena across and within EMs. Some work is conceptual and provides excellent frameworks (e.g., [2, 5, 10, 18]), other studies are empirical (examples include papers in the International Journal of Research in Marketing’s 2013 Special Issue on Emerging Markets; [6, 12, 17]) . This Special Issue of Customer Needs and Solutions builds upon the increasing academic and managerial interest in identifying the marketing theory and practice implications of the seismic shifts in the current world economy. In this editorial, we focus on summarizing some of the findings of the papers in this Issue. Additionally, we lay out a framework for future analyses. So, what, if anything, is different about emerging markets that really matters? We have summarized nine broad areas in which the differences between emerging and developed markets have significant theoretical and managerial implications (outlined in Table 1). Before addressing EMs, it is useful to understand the historical context from which they evolved. Emerging markets and their role in the global economy form a natural development in the dynamics of international trade. Ricardo, with his theory of comparative advantage in 1817 [3] noted that because different markets had different resources, wealth could be created by countries specializing in those industries in which they had a relative advantage (for example, with the British making cloth and the Portuguese making wine). The success of early European traders applying these principles led to colonization where terms of trade could be underpinned by military power; with the Indian Mutiny, Boxer Rebellion in China and opening of Japanese markets by Admiral Perry providing excellent examples [8]. Economic history up to the beginning of the twentieth century focused on trade as a source of raw materials (reflecting a supply side view of the world and the primacy of western markets). There was little focus on foreign markets and that which there was, was seen as a way of absorbing excess capacity and leveraging the colonists’ ability as an intermediary (e.g., Boston Tea Party, Salt March on India). This situation continued until the Second World War (1939–1945), after which many of what were then called developing countries gained their independence. However, with the fall of colonialism, under-developed markets were still seen as terms of trade takers, albeit with limited * John Roberts johnr@agsm.edu.au