Multinational Companies In Developing Countries Research Articles

International Joint Ventures Among Developing Country Multinationals: The Case of Salinas Group-FAW

I study the determinants of the success of international joint ventures (IJVs) among developing country multinational companies. From the analysis of the case of the IJV between the Mexican conglomerate Salinas Group and the Chinese automobile producer FAW I conclude two points. First, IJVs among developing country firms reveal an implicit assumption of a tension due to helping an industry competitor and gaining market knowledge and technology. Second, IJVs among developing country firms reveal the unique challenge of having to face the perceived disadvantage of lower quality of products created by developing country firms.

The role of home country political resources for Brazilian multinational companies

This paper aims to analyze the interactions between home country governments and Developing Country Multinational Companies (DMNCs). Drawing on evidence from the Brazilian political environment and Brazilian multinationals we investigate the mechanisms governments use to influence the internationalization process of domestic companies and firms' political strategic responses to shape the political institutional environment in which they operate. We argue that foreign direct investment (FDI) outflows from developing economies need to be explored given specific country level contextual factors, such as high levels of government involvement. Our main findings support this idea and indicate that home country governments use a series of formal and informal mechanisms in order to drive the international expansion of DMNCs in both the entry and consolidation phases. Moreover, DMNCs political behavior in the home country political environment accounts for an important part of their strategy to develop political resources and obtain above average returns from governmental benefits.

Upgrading Technological Capabilities by Developing Country Multinational Companies

We study the process by which developing country multinationals (DMNCs) upgrade their technological capabilities to international levels. The case study of the Chinese telecommunication equipment manufacturer Huawei supports three conclusions. First, despite some views that DMNCs are technological laggards, we show that DMNCs can reach levels of technological sophistication of advanced economies in a compressed manner. Second, the way DMNCs improve their technological capabilities is by raising the mode of technology upgrading, moving across reengineering, replacing, refining, and recreating capabilities to reach the technological frontier. Third, managers at DMNCs raise the mode of technological upgrading by the continuous stretching of the skills and knowledge of engineers. These ideas extend the study of dynamism in capability life cycles and the creation of dynamic capabilities generated from studying ‘Western’ firms operating in countries with sophisticated innovation systems by explaining the development of technology in countries with weak innovation systems.

Extending theory by analyzing developing country multinational companies: Solving the Goldilocks debate

I analyze how the study of developing country multinational companies (DMNCs) can help extend theory. The renewed interest in DMNCs has generated a ‘Goldilocks’ debate, with one camp arguing that the analysis of DMNCs is ‘hot’ and requires new theory, another camp arguing that it is ‘cold’ and no new theory is required, and a third camp arguing that it is ‘just right’ and it can be used to extend theory. I follow this third camp and argue that the unique conditions of developing countries influence the internationalization of DMNCs, creating a laboratory for extending theory. I illustrate this idea by reviewing some of the key theories and models of the multinational company and explaining how they can be extended with the study of DMNCs.

Legitimacy beyond borders: Indian software services firms in the United States, 1984 to 2004

The emergence of developing country multinational companies (DMNCs) provides us an opportunity to redress the neglect of the process of cross‐border legitimation. We argue that DMNCs face three challenges to legitimation in developed country markets—liability of foreignness, liabilities of origin, and liability of advantage. By means of a qualitative inquiry into the cultural‐cognitive legitimation of Indian software services firms in the United States over the course of two decades, we identify five core legitimation dynamics that explain how DMNCs respond to the aforesaid challenges and acquire legitimacy in developed country markets. Our study suggests that global strategy is not merely about deploying competitive advantage, but is also about overcoming competitive disadvantage as reflected, say, in the absence of host country legitimacy.

Obligating, Pressuring, and Supporting Dimensions of the Environment and the Non‐Market Advantages of Developing‐Country Multinational Companies

abstractWe analyse the non‐market advantages of developing‐country multinational companies (DMNCs) over advanced‐economy multinational companies (AMNCs) when both compete in the same host country. Non‐market advantages are advantages based on resources developed by the firm to operate in a country's environment. Building on the resource‐based theory and the concept of distance, we classify dimensions of a country's environment into three types (obligating, pressuring, and supporting) and argue that each type has a different impact on the advantages of DMNCs over AMNCs. First, obligating dimensions are those dimensions in which countries are not more or less developed than others; they are merely different, obligating a firm to develop particular non‐market resources to operate there. In such cases, the advantage of DMNCs over AMNCs cannot be differentiated. Instead, MNCs from more distant home countries have a disadvantage compared to MNCs from less distant countries. This is the traditional conceptualization of distance in the literature. Second, pressuring dimensions are those dimensions in which countries are more or less demanding in pressuring the firm to continuously upgrade its non‐market resources. For these dimensions, DMNCs face a disadvantage against AMNCs, because the latter have more sophisticated non‐market resources than the former. Third, supporting dimensions are those in which countries are more or less developed in their provision of external non‐market resources that support the firm's operations. In this case, DMNCs tend to enjoy an advantage over AMNCs, because the former are better at dealing with a lack of supporting resources than the latter. These last two types of dimensions challenge the commonly held ideas that distance is always directionless and always results in a disadvantage.