Emerging Market Multinational Companies Research Articles

Beware the puppeteers: the role of geopolitics in the bargaining dynamics between a Russian politically connected MNC and the country of Montenegro

PurposeThis paper aims to use the obsolescing bargaining power (OBP) Model (Vernon, 1977, 1998) to analyze the case of United Company Rusal, a Russian politically connected multinational companies (MNCs) that was one of the world’s largest aluminum companies between 2005 and 2014, having acquired and, ultimately, sold the Montenegrin aluminum smelter company Kombinat aluminijuma Podgorica.The authors did so with the aim of answering the following question: How do geopolitics affect the bargaining balance of power between a Russian MNC and a host country? Design/methodology/approachThe authors used the discourse analysis methodology to identify the key players in the bargaining process and illustrate the evolving bargaining process.FindingsThe authors demonstrated that, over time, the shift in power from the Russian MNC to the host government had not merely been the result of the increase in committed MNC assets in the host country but, rather, of a geopolitical chess game involving the Russian Government, North Atlantic treaty organization (NATO) and the European Union (EU). By extending the OBP model with geopolitics, the authors found that a political agenda can influence the outcome of a bargaining process.Originality/valueThe authors extended the OBP model to illustrate the complex interaction between an emerging market MNC and an emerging host country government, indirectly influenced by two supranational organizations – the EU and NATO.

The Role, Nature and Contribution of Indian Emerging Market Multinational Companies in African Countries

This article examines factors pertaining to the development of Indian emerging market multinational companies (EMNCs) in African countries. India is a member of the BRICS grouping of developing countries, the others being Brazil, China, Russia and South Africa. Therefore, understanding its role, scale and dynamics of internationalising in the African context is particularly important. The following key areas are examined: the historical and socio-economic context, internationalisation strategies of Indian MNCs in African countries, home and host country factors, labour markets in host countries and human resource management (HRM) approaches of selected Indian EMNCs in particular African countries. Most work on international business and international HRM in Africa focuses on the Sino-Africa nexus. Both China and India are members of the BRICS grouping but have followed different trajectories in internationalising in the African context. This analysis helps fill a gap by evaluating the Afro-Indian relationship in business, particularly EMNCs from India. The analysis finds the following abiding themes in the historical connections and relationships of Indian EMNCs: the role of family-owned businesses, human resource development and long-term host country commitment.

From efficiency to legitimacy: the changing logic of internal CSR in emerging multinationals during internationalization

This paper focuses on internal corporate social responsibility (CSR) (i.e. shareholder responsibility and employee responsibility) changes within emerging-market multinational companies (EMNCs) with a resource constraints perspective and attention-based view, providing a finely variegated analysis of and new insights into the internationalization–CSR relationship. Specifically, as EMNCs’ resource constraints change from high to low and the primary focus shifts during internationalization, their dominant logic moves from efficiency to legitimacy; correspondingly, their internal CSR shows a U-shaped change—first declining and then increasing. This nonlinear model is supported by an empirical test of Chinese listed MNCs from 2013 to 2018. On this basis, the moderating roles of state-owned background and innovation-oriented strategy are examined, as both affect the resource constraints and attention structure of EMNCs during internationalization. We also provide a sensitivity analysis of internationalization’s impact on each dimension of internal CSR and an in-depth discussion of our findings.

Enriching internationalization process theory: insights from the study of emerging market multinationals

We argue and explain how the study of emerging market multinational companies can help enrich our understanding of the internationalization process. Firms' internationalization process is a central and enduring theme in international business. However, most of the theoretical models are built on the analysis of advanced economy multinationals. Emerging market multinationals differ crucially in the role that the home country plays in their behavior, resulting in different patterns of internationalization. We propose that the discussion of the applicability of extant theory can be advanced by differentiating internationalization theories according to three different ontological perspectives: resource oriented, transaction oriented, and process oriented. We further suggest that the study of emerging market multinationals' internationalization processes reveals three contextual accelerators: government, catch-up, and global value chains. These accelerators help adapt internationalization process models to new contextual realities.

Multicultural leaders from emerging markets: transforming international acquisitions and corporate social responsibility

PurposeThe purpose of this paper is to explore the influence and advantages of leadership multiculturalism on global strategy development through cross-border mergers and acquisitions (CBA) and corporate social responsibility (CSR) from emerging market multinational companies (EMNCs) expanding into emerged markets. The key contribution of asymmetric multiculturalism is a novel finding based on inductive research. We fill a gap by further linking business leader characteristics and corporate strategic actions and examining how multicultural business leaders from emerging markets can be highly effective at CBA and CSR.Design/methodology/approachThe paper draws on in-depth interviews, observations and documentary evidence analyzed with iterative coding, construct definition and thematic development to understand how leadership multiculturalism affects CBA and CSR in an EMNC over time.FindingsThe new construct of leadership asymmetric multiculturalism describes strategic advantages accruing to leaders from developing markets who are culturally fluent in both emerging and emerged market milieus. The construct contributes to emergent research on the rise of multicultural leaders and their strategic advantages and delineates a pathway toward identifying advantages of emerging over emerged market business leaders.Research limitations/implicationsThe research addresses specific CBA and CSR strategies within one emerging market region and EMNC. Future research should further articulate and validate the key construct of asymmetric multiculturalism, further examine its sources, draw more explicit comparisons with data from emerged market leaders, and explore the applicability of these findings to strategic actions and advantages in both emerging and emerged markets.Practical implicationsEmerging market corporate leaders should identify and develop pertinent aspects of their own asymmetric multiculturalism in enacting CBA and CSR strategy with respect to EMNCs and firms from developed markets. Emerged market leaders should become more aware of and cultivate their own multiculturalism.Social implicationsAsymmetric multiculturalism can be accompanied by heightened awareness of global citizenship — including codes of ethics, environmental challenges, community outreach and fair labor practices — which, in tandem with CBA, can strengthen emerging market firms’ performance and reinforce their global stature and reputation.Originality/valueAsymmetric multiculturalism is a new explanatory construct in the sociological, economic and management disciplines. Emerging markets corporate leaders utilize their multicultural competence to accelerate global CBA and CSR activity and advance strategic opportunities for their firms. The identification of advantages deriving from emerging market leadership capabilities is an unusual finding given the more typical emphasis on the privileges of emerged market leaders and firms.

Deepening the timing dimension of emerging market multinational companies’ internationalization – An exploratory perspective

Building from the nascent debate pertaining to the internationalization trajectories followed by EMNCs, this article proposes to better understand behaviors of multinational companies from emerging markets (EMNCs). A database containing the complete internationalization trajectory of 110 firms was created to analyze sequence patterns. Optimal matching technique helped us to build a taxonomy of seven distinct sequence patterns (serial acquirers, late acquirers, sequential acquirers, contractual internationalizers, collaborative internationalizers, opportunistic internationalizers, wholly owned internationalizers). Our findings partially confirm previous works pertaining to the internationalization process of EMNCs and shed a light on atypical behaviors which have not been studied yet. These findings allow us to obtain new insights, deepening our understanding of theories depicting how EMNCs behave such as springboard theory and the Linkage Leverage Learning framework. We also provide recommendations to MNC managers and for public policy.

Aile İşletme Gruplarının Uluslararasılaşmasına Dair Kavramsal Bir Çerçeve: Türkiye Bağlamı

Resource exploration has been seen as the main reason for the accelerated internationalization of emerging market firms. However, despite their specific contexts and organizational forms, emerging market multinational companies (EM MNCs) literature underestimated the context-specific factors and their effect on foreign direct investment activity so far. EM MNCs in those markets may have their own firm-specific resources that fit their institutional contexts and can eliminate transaction costs, which result from those contexts. For instance, Business Groups (BG) with their unique attributions would have a hybrid internationalization model like their forms, in those markets. This study will try to propose a multi-theoretical perspective, which includes resource, transaction costs and institution-based views for internationalization of family BGs (FBG), which is a dominant form of organizing in Turkey. Hence, the determinants of the internationalization level of FBG will be discussed from different perspectives and proposed.

First Capital Bank: The internationalisation of a Malawian bank into a regional player in Southern Africa

Subject area of the teaching case The subject area is international business and strategy. The case allows scope for the following areas: internationalisation, market strategy, emerging market multinational companies, and doing business in Africa. Student level The primary target audience for this teaching case is postgraduate business students such as Master of Business Administration (MBA), or postgraduate management programmes. The case is primarily designed for use in courses that cover strategy or international business. Brief overview of the teaching case This case centres on the international growth strategy of FMBcapital Holdings Group (FMB), the Malawian commercial banking firm. The case finds the founder and current group chairman, Hitesh Anadkat, in 2016, as he and the FMB board are about to decide on the next move in their Southern African strategy. Since opening the first FMB branch in Malawi and becoming the country's first commercial banker in 1995, Anadkat and his team have ridden a wave of financial deregulation across the region to successfully expand into neighbouring Botswana, Zambia, and Mozambique. Now, an opportunity to gain a foothold in Zimbabwe means the leaders must decide (1) whether they want to continue to grow the FMB footprint across the region, or focus on their integration and expansion efforts within existing markets; and (2) how they will realise this strategy. Expected learning outcomes International expansion – identifying the need to expand into new markets; identifying the combination of internal strengths and external conditions that make international expansion viable; and identifying and analysing each possible new market(s) and the decision-making process involved. Political, social and economic factors in Africa – understanding how these external institutional factors present constraints, risks and opportunities for internationalisation and hence shape strategy; understanding that these factors may vary significantly across countries on the continent (in spite of their geographic proximity) and in some cases, within a single country; and understanding that by selecting markets with extreme socially and politically volatile contexts, the risk of a worst-case scenario transpiring (in which institutional forces trump business strategy) is appreciable. Combination of resource- and institutional-based approaches – recognising that successful internationalisation requires capitalising upon both internal resources and institutional mastery. Choosing expansion strategies – assessing the type of new market entry (e.g. greenfield or acquisition of existing operations) and its adequacy for penetrating a new market. Using networks and local partners – to substitute and enhance the benefits that originally flow from a small (and sometime family-established) business, with an emphasis on acquisition of skills and networks in foreign countries. Regional integration – optimising business operations through a sharing or pooling of resources and improved capital flow between subsidiaries, in some instances by taking advantage of economies of scale (this extends to enhancing the reputation and awareness of a brand across a wider region). Family businesses – identifying the value that can be gained through establishing a family business with the support of many “close” stakeholders while also noting the limitation that exist as expansion and growth is required.

A value creation perspective on international business in Latin America: directions for differentiation between emerging market multinationals

PurposeThis study aims to draw researchers’ attention to the need to differentiate within the emerging market multinational companies (EMNCs) category. This study focuses on international business in Latin America to argue that the region’s specific institutional characteristics have consequences for within-firm decision-making regarding internationalization strategies. Additionally, the study suggests that to develop a more specific understanding of international business in emerging markets, it is important to consider how decision-makers define value and how they can capture such value.Design/methodology/approachThe approach used in this study draws on the bathtub analogy used in micro-foundations research in international business. It proposes a multilevel analysis in which micro-level variation in within-firm decision-making is considered, while accounting for the conditioning effects of macro-level contextual factors.FindingsThe study identifies characteristics of the Latin American institutional context that are relevant to international business strategies and that potentially differ from other emerging market contexts. These include the pendular shifts to and from pro-market economic reform, fragmented government intervention in business, underdeveloped capital markets, low competition among firms and polarized labor markets. The study explains how these characteristics shape the definition of value and firm strategies to capture value in international markets, and provides examples from firms in different industries.Originality/valueThis study applies a value creation and capture perspective to international business in Latin America, allowing for the simultaneous consideration of macrolevel institutional characteristics and microlevel variation in decision-making regarding internationalization strategies. This perspective not only helps to distinguish Latin American EMNCs from companies from other emerging market contexts, but also explains the considerable variation in the internationalization strategies of firms within the region.

Mapping the impact of home‐ and host‐country institutions on human resource management in emerging market multinational companies: A conceptual framework

While there is a growing literature concerned with multinational companies from emerging markets (EMNCs), it does not contain a robust conception of how institutions shape human resource (HR) practices in such firms. We contribute to filling this gap through developing a framework of how institutions create a range of constraints and opportunities for EMNCs. Specifically, our framework contains three key elements of how MNCs from emerging markets interact with institutions: EMNCs develop approaches that to some extent reflect the perceived strengths and weaknesses of the institutions in the home country (institutional conditioning); the strategies of actors in EMNCs can overcome the weaknesses of the home country by drawing on institutions in other countries (institutional arbitrage); and the actions of EMNCs can reinforce, or create pressures for change in, the institutional context in the countries in which they operate (institutional change/consolidation). By mapping this set of strategies of EMNCs, we contribute to a fuller understanding of the relationship between institutions and HR practices, and we outline how the rise of EMNCs reshapes the global landscape by adding new kinds of firm behavior to capitalist diversity.

No Place like Home? How EMNCs detach from hyper turbulent contexts

Using comparative case histories of 12 firms over 12 years we theorize how emerging market multinational companies (EMNCs) born or based in hyper turbulent contexts internationalize by sequentially arbitraging rents, values, and scales abroad. We first problematize the role of home context through a review of extant theories of institutional arbitrage to reveal distinct motivations and matching criteria depending on the (in)stability EMNCs experience in their country. We then inductively derive specific sets of practices by which EMNCs use institutional arbitrage to mitigate the rapid and radical deterioration of their place of doing business and group these practices in three sequential modes. Combining multi-modal historical analyses and longitudinal comparative case methodologies to study the co-evolution of institutional arbitrage modes and home context, we show how the sequence of rent-, value-, and scale- centric institutional arbitrage progressively erodes both the protective and the expressive attributes of home by triggering repeated revisions in EMNCs’ risk preferences and opportunity references.

Emerging market MNCs' cross-border acquisition completion: Institutional image and strategies

This study investigates the negative effect of the home country's institutional image on emerging-market multinational companies' acquisitions, and how these companies can increase their acquisition completion by overcoming this effect. We propose that a foreign acquisition is more likely to be completed if: (1) the acquirer has an extended home base - it has inward internationalization experience, or it acquires through overseas subsidiaries; and (2) it enters institutionally close markets. Using longitudinal data on 13,259 acquisitions between 1996 and 2012 by firms from ten major emerging economies, we empirically test our hypotheses. The findings have important implications for scholars, policymakers and managers.

Offshore versus domestic: Can EM MNCs reach higher R&D quality abroad?

In the current discourse about the technological development of emerging market multinational companies (EM MNCs), the internationalization of research and development (R&D) activities is increasingly discussed as a strategy for catching-up to established MNCs. EM MNCs attempt to use international R&D to tap into technologically superior resources abroad which are not available to them in their home market. This study compares the performance of domestic and offshore R&D activities to look into EM MNCs’ ability to conduct high-quality R&D abroad. We use the Chinese telecommunication equipment manufacturer Huawei as a best practice case study. To map their worldwide patent quality pattern, we propose a multiple-patent-office-approach to ensure a balanced view on their activities with data from SIPO, USPTO and EPO. We also employ three different measures to capture different dimensions of patent quality. The results of the empirical model support the assumption of higher quality for patents with knowledge from advanced offshore locations.

The role of international institutional complexity on emerging market multinational companies’ innovation

Research SummaryThis study examines the role of international institutional complexity, which is defined as the scope and multiplicity of institutional dimensions across foreign markets, on emerging market multinational companies’ (EMMCs) innovation performance. We propose that international institutional complexity provides learning opportunities for EMMCs’ innovation performance but also incurs higher management costs to handle information overload from overextended internationalization. We further propose that the host exposure and the heterogeneity of an EMMC's top management team (TMT) moderate the main effect of international institutional complexity on EMMC innovation. The empirical testing utilizes a longitudinal panel dataset of 7,072 foreign expansion steps by 767 Chinese firms from 2001 and 2010 and offers strong support for the proposed hypotheses.Managerial SummaryDespite the emergence of EMMCs over the past 30 years, there is little understanding of how international institutional complexity impacts EMMCs’ innovation capabilities. By analyzing a longitudinal panel dataset of 7,072 foreign expansion steps by 767 Chinese firms from 2001 and 2010, we find that the international institutional complexity of an EMMC has an inverted U‐shaped impact (first increasing and then decreasing) on its innovation, such that a moderate level of international institutional complexity generates the most innovation output. We also find that TMT host exposure and TMT heterogeneity positively moderate the relationship between international institutional complexity and EMMCs’ innovation performance. Our study contributes to better understanding EMMCs’ international strategies in enhancing their innovation capabilities.

Make Bilateral Relations Great Again: Effect of Political Affinity on Post-acquisition Performance

Emerging market multinational companies (EMNCs) are attracting increased attention as they play a greater role in the international business environment. These firms are especially noteworthy as th...

The internationalization process of emerging markets multinational companies (EMNC): A theoretical and conceptual examination on Turkey

Today, the efforts and achievements of the emerging economies towards becoming multinational are paying attention to the academic and international business world. Until today, the internationalization process of developed countries companies are examined, nowadays a reversal point of view has developed and the internationalization process of emerging market multinational companies (EMNC) have begun to be studied heavily. The aim of this study is to examine the internationalization processes of EMNC by presenting current model, by making proposals to companies that want to be multinational. Starting from this aim, the internationalization processes theories of EMNC have been examined; the statistical data of international organizations are given by using documentary research method accepted as a quantitative research method and Turkish Multinational Companies are analyzed. When these theories and our multinational companies are examined, it has been found that Turkey is supported in the framework of internationalization process, Uppsala, Network, Eclectic Paradigm theories.

How does uncertainty impact opportunity development in internationalization?

The features of the internationalization of emerging market multinational companies (EMNCs) create a laboratory for extending theory. In this paper, we argue that a high level of asymmetry between prior knowledge and a non-incremental commitment, such as an acquisition, lies at the core of understanding these types of internationalization processes. Our proposed theoretical view is that while some uncertainties in opportunity development are known to the firms and can be managed by available knowledge, disruptive commitments can result in complexes of unstable and unilineal dynamics that bring about unexpected – and hence unforeseeable – uncertainties. These uncertainties may be a source of future unintended consequences that will have an impact on the firm as the internationalization process unfolds. This view is used for analysis of a longitudinal case study concerning the acquisition of a Swedish firm, Vargön Alloys, by the Turkish corporation Yildirim Group, focusing on the opportunity discovery and exploitation period between 2008 and 2013. By dividing uncertainty into two types (foreseeable and unforeseeable) and analysing the hidden problems that emerged after the sudden fusion of the two networks, the study nuances understanding of the emergent and non-orderly nature of the internationalization process as it unfolds. From a process point of view, the study may aid deeper understanding of complications when discovering and exploiting opportunities.

Emerging Market Multinational Companies and Internationalization: The Role of Home Country Urbanization

We develop a multilevel theoretical framework for investigating the role of home country urbanization for emerging market multinational companies' (EMNCs) international expansion. We propose that more urbanized home environments directly increase EMNC's proclivity to internationalize and moderate the effects of firm intangible and tangible resources. The empirical counterpart studies 592 EMNCs from 18 different countries in 2010 and an unbalanced panel of a subsample of these firms over the period 2006–2010. Our hypotheses are confirmed in both datasets. We find that while urbanization complements firm financial resources when expanding abroad, it appears to substitute to some extent for internal R&D capabilities. Our findings further our understanding of the drivers of internationalization of EMNCs.

Emerging market multinational companies’ evolutionary paths to building a competitive advantage from emerging markets to developed countries

One significant emerging phenomenon of global competition is the increasing number of Emerging Market Multinational Companies (EMNCs) that have survived and succeeded in the constraining institutional environments in their home turfs and are now participating in the global marketplace. However, despite the growing literature, our understanding of the factors that influence EMNCs’ competitive advantage is limited. We conduct a historical longitudinal analysis of sixteen companies originating from key emerging markets viz. India and China. Our findings suggest that EMNCs’ evolutionary paths to building competitive advantage from their home market to the developed countries is, on one-hand, based on the EMNCs’ ability to acquire resources and absorb them to build their own advantage. On the other hand, it is also based on EMNCs’ ability to find new market niches and to enhance their innovation capabilities to overcome the liability of emergingness.

Unpacking Institutional Distance: Addressing Human Capital Development and Emerging-Market Firms’ Ownership Strategy in an Advanced Economy

As latecomers to global business competition, emerging-market multinational companies (EMNCs) utilize cross-border mergers and acquisitions (M&As) to quickly acquire strategic assets, resulting in an improved competitive position. Advanced markets with well-established firms and well-developed market-supporting institutions become particularly important destinations for EMNCs’ foreign operations. Institutional distance, which represents conflicting legitimacy requirements between the host and home institutional environments, is expected to be negatively associated with the foreign acquirer's ownership position. The current study examines a sample of EMNCs’ cross-border M&As in the United States between 2005 and 2011 and reveals the unique nature of EMNCs’ ownership strategies. Taking both formal and informal institutions into consideration, our findings suggest that EMNCs originating in countries with lower levels of human capital development may have more urgency in seeking ownership control in advanced markets and are less influenced by the negative association of institutional distance in their ownership strategy. © 2016 Wiley Periodicals, Inc.