Emerging Market Multinational Corporations Research Articles

Generous to a fault: Differential impact of CSR investments on financial gains in Indian market multinationals

To date, the extant Corporate Social Responsibility (CSR) literature has overlooked the performance consequences of different forms of CSR investments made by Emerging Market Multinational Corporations (EMNCs). Addressing this knowledge gap, and drawing on legitimacy theory, we examine the impact of external CSR investments (e.g., social and community philanthropic support activities) and internal CSR investments (e.g., working conditions, employee rights and equal employment opportunities) on financial performance of EMNCs, while also accounting for the moderating effects of internationalization location choices. We test our hypotheses on a panel consisting of 1513 unique Indian EMNCs, in the 2014–2019 time-period. On applying various estimation techniques, the findings reveal that both external and internal CSR investments are positively associated with financial performance of EMNCs, while the destination location of foreign investments and home-host geographic and institutional distance moderate these relationships. This study offers new empirical evidence on the financial implications of different types of CSR investments available to EMNCs and advances legitimacy theory by expanding its dimensional and contextual scope.

Does global diversification promote or hinder green innovation? Evidence from Chinese multinational corporations

Green innovation plays a critical role in facilitating firms to achieve sustainable development. This study aims to investigate how global diversification affects green innovation. Existing literature suggests that global diversification can have both positive and negative effects on firms' engagement in green innovation. While it can increase firms' pressure and ability to participate in green innovation activities, thereby promoting their green innovation efforts, it can, however, be utilized to evade environmental responsibility, thereby hindering their green innovation efforts. In an empirical analysis focusing on a sample of Chinese multinational corporations (MNCs) from 2008 to 2020, MNCs' global diversification is found to affect their green innovation significantly and positively. Moreover, the positive effect of global diversification on green innovation is enhanced by factors, such as the host country's institutional quality, state ownership, and the CEO's academic experience. The findings suggest that global diversification can facilitate Chinese MNCs' engagement in green innovation activities rather than being utilized to evade environmental responsibility. Furthermore, the results reveal that the positive effect of global diversification on green innovation depends on the external and internal environments in which MNCs operate. Overall, this study provides new insight into the determinants of corporate green innovation in emerging market MNCs.

Innovation Training and Entrepreneurial Climate in Emerging Market Multinational Corporations

Despite their innovation practices, Latin American companies seem to show low levels of corporate entrepreneurship. More research on corporate practices directed at infusing an entrepreneurial climate in the region is needed. This study draws on a recent theory that brings together configuration theory with prior corporate entrepreneurship conceptualizations. With this study, the authors test whether innovation training programs increase the entrepreneurial climate of multinational corporations from Latin American emerging markets. The authors of this study collected data from a sample of 2,796 employees of a Colombian multinational, divided into two groups of trained and untrained staff. They hypothesise that the corporate entrepreneurship climate would be higher in the trained group. They specify and validate a series of multigroup structural equation models to test their hypothesis. The results of this study suggest that some dimensions of entrepreneurial climate are higher when companies implement innovation programs.

Politically connected EMNCs in a (de)globalising world: A review and future research directions

Emerging market multinational corporations (EMNCs) have emerged as significant global players, driven by their home country political connections that present both opportunities and challenges. Despite the insights gained from current studies, we still lack a clear conceptualisation of diverse political connections and the distinctiveness of politically connected EMNCs. Our study conducts a comprehensive review to bridge those gaps. We identify and compare two types of political connections, delve into major theories and highlight their main focus, key arguments, mechanisms and outcome predictions. Consequently, we propose a context-mechanism-outcome framework across three contextual levels, emphasising theoretical convergence and divergence between politically connected EMNCs and advanced market multinational corporations (AMNCs). We also spotlight disruptions caused by deglobalisation and their implications for those EMNCs. We conclude by proposing an agenda to reorient future research on this important and timely topic, especially in light of the deglobalisation trends that are reshaping the international business landscape.

Do emerging market multinational corporations headquarter-subsidiary relationships foster subsidiary innovation and performance in developed markets?

This study investigates sources of innovation and performance for emerging market multinational corporations (EMNCs). We develop a contingency framework that examines how internal administrative embeddedness (IAE) and internal knowledge embeddedness (IKE) shape EMNC overseas subsidiary innovation capabilities, and how these relationships are contingent on EMNC headquarter host country experience and subsidiary embeddedness with host-country business partners. Data were collected from a survey of 242 dyads composed of Chinese EMNC headquarters and overseas subsidiaries located in 30 developed countries. Secondary data were also collected for EMNC host country experience and subsidiary performance. The empirical results show that IAE negatively influences EMNC subsidiary innovation capability, and this negative relationship is stronger when subsidiary host-country embeddedness increases. The findings further reveal that IKE positively influences subsidiary innovation capability. This relationship becomes stronger as subsidiary host-country embeddedness and headquarter host country experience increase. We also find that subsidiary innovation capability mediates the relationship between HQ-subsidiary embeddedness and subsidiary performance. Theoretical and managerial implications are discussed.

Emerging market multinational corporations' cross‐border mergers and acquisitions and political distance: Does corporate political activity matter?

AbstractDue to rising anti‐globalization sentiment, emerging market multinational corporations (EMNCs) face additional challenges in conducting cross‐border mergers and acquisitions, particularly in the developed markets. Built on institutional theory, we specifically examine how political distance, representing host–home country differences in various attributes in the political environment, influences the speed of approval for EMNC acquisition in the United States. The findings suggest that a larger political distance between the United States and EMNCs home country reflects challenges for EMNCs to gain legitimacy in the United States, resulting in the longer time required for acquisition approval. The EMNCs' corporate political activity moderated this relationship in that more corporate political activity improves the legitimacy perception of EMNCs among political actors, decreasing the time required for acquisition approval.

Liabilities of origin and its influence on firm's corporate social performance? A study of emerging market multinational corporations

AbstractThis study draws upon the institutional‐based view to examine how home country institutional voids affect the corporate social performance (CSP) of emerging market multinational corporations (EMNCs). We propose that home country institutional voids of EMNCs are positively related to CSP. We also argue that EMNCs' internationalization and visibility will further augment the above relationships. We tested our hypotheses using a sample of 89 EMNCs from 10 countries from 2009 to 2018 and found support for our arguments. Our findings show that EMNCs use CSP to overcome the liabilities of origin due to their home‐country institutional voids. Internationalization and visibility increase the challenges of origin liabilities and EMNCs respond by enhancing their CSP. Our research adds to the existing knowledge base on institutional voids within the realm of international business.

Multinationals from emerging economies: Strategies, challenges, and the way forward

AbstractMultinationals from emerging economies are relatively new players in the global economy. This Special Issue includes five articles that cover several important aspects of the market and nonmarket strategies pursued by emerging market multinational corporations (EMNCs). Given that only a few firms from emerging markets embrace the possibilities and challenges of going global, we highlight the need to examine country, industry, and firm level antecedents of the emergence of EMNCs. We also draw attention to the need to study the role played by immigrant populations in EMNC internationalization.

Interplays of Political Ties and Social Evaluation of Emerging Market Multinational Corporations

In this paper, we address the question of how interplays of home country political ties and target nation political ties might shape social evaluation of EMMNCs with different ownership structures. We conduct a comparative case study of four overseas acquisitions made by two EMMNCs (one SOE and one POE) from China during 2014–2017 in a strategic (port) industry. The port investments include China Merchant Group’s (CMG) Hambantota Port, Sri Lanka, and Port of Newcastle, Australia) and Landbridge Group (LBG)’s Port of Darwin, Australia, and Colon Container Port, Panama). The research result shows a relationship between interplays of political ties across home and target nations and levels of public disapproval faced by EMMNCs. This study makes three contributions. First, it extends the political embeddedness perspective by developing propositions about the relationships of political ties’ interplays and public disapproval levels. In particular, the case data reveals that target nation ties play a stronger role than home country ties in influencing public disapproval of EMMNCs. Second, it enriches the perspective by providing an argument for the sociopolitical liabilities (i.e., generating concerns across domestic and international levels) of political ties, depending on the strength of such ties to the home country and to a target nation. Third, it adds to literature on nonmarket strategy by highlighting the sociopolitical liabilities of CPA conducted by leveraging partnerships with governments or intergovernmental relationships. We outline future research directions and implications for EMMNC managers.

Coevolution of post-merger integration and dual knowledge networks reconstruction: evidence from Chinese overseas acquisitions

PurposePost-merger integration (PMI) is driven by coevolving processes. By integrating the literature on acquisitions with that of knowledge networks, this paper highlights different reconstruction mechanisms for dual knowledge networks during PMI – namely, internal knowledge network coupling and external knowledge network embeddedness. This paper aims to examine their coevolutionary relationships with PMI.Design/methodology/approachA coevolutionary framework is tested using a latent growth model and cross-lagged models. The analysis is based on longitudinal data collected from 116 Chinese technology-sourcing overseas merger and acquisition firms.FindingsThis paper unearths a novel idea that variations in post-merger reconstruction of dual knowledge networks can explain why some acquirers increase the degree of integration faster than the others. The results show that the internal knowledge network coupling leads to more knowledge similarity and, in turn, causes a higher degree of integration. The external knowledge network embeddedness also causes higher relative network status of the acquirer, which consequently leads to a higher degree of integration. Furthermore, results from cross-lagged models confirm that an increase in the degree of integration positively influences subsequent changes in the internal knowledge network coupling and external knowledge network embeddedness, thus forming a coevolutionary relationship over time.Originality/valueThis paper responds to recent calls for more insights into the dynamics of PMI. By highlighting different reconstruction mechanisms for internal and external knowledge networks during PMI, this paper explains why it is important to understand PMI dynamics from a dual knowledge network perspective. This paper is the first to adopt a coevolutionary perspective and provide a more comprehensive dynamic framework between PMI and reconstruction of dual knowledge networks. Besides, this paper contributes to the research on emerging market multinational corporations’ cross-border merger and acquisition integration from a dynamic perspective, revealing the time effects of traditionally favored light-touch integration.

Pursuing sustainability development goals through adopting gender equality: Women representation in leadership positions of emerging market multinationals

AbstractThis study examines the competitive disadvantages rationale behind the pursuing of Sustainability Development Goals (SDGs) by emerging market multinational corporations (EM‐MNCs) in foreign markets. We argue that EM‐MNCs may pursue gender equality goal in host markets as a legitimation strategy to offset their strategic disadvantages inherited from the home markets. Based on a sample of foreign subsidiaries from 10 major emerging countries from 2010 to 2020, this study finds strong evidence demonstrating that the institutional quality of home markets exerts a positive effect on the representation of women in leadership positions of EM‐MNCs. Additional analyses demonstrate that international experience and institutional ownership further magnify this effect.

How do firms upgrade innovation capabilities through the coevolution of post-merger integration and network reconstruction? A multiple-case study of Chinese companies

Purpose Post-merger integration (PMI) is driven by coevolving processes. This paper examines the coevolution of dynamic integration strategy and network reconstruction and explores how these processes systematically enable emerging market acquirers to upgrade innovation capabilities.Design/methodology/approach This paper conducts a multi-case study based on four Chinese overseas acquisitions of manufacturing firms. The data were collected from interviews and archival documentation.Findings This study develops a coevolutionary framework of dynamic integration strategy and network reconstruction to explain processes and mechanisms of an acquirer’s innovation capability upgrading. This framework identifies three network motivations, namely, network access, network connection and network synergy. Under different network motivations, dynamic transitions of the acquirer’s integration strategy coevolve with multi-level reconstruction of its networks. Collectively, they are important mechanisms driving innovation capability moves from imitation innovation to asportation and reimitation innovation and then to independent innovation.Originality/valueThis paper responds to a recent call for more insights into the dynamics of PMI and contributes to the research on emerging market multinational corporations’ post-acquisition integration. By integrating the M&A and networks literature, the paper provides evidence of unexplored mechanism of network changes during PMI. It reveals that how acquirers manage the dynamics of PMI to gradually achieve multi-level reconstruction of their networks. Based on a coevolutionary framework, the paper provides a process perspective on how the coevolution of PMI and network reconstruction promotes the upgrading of innovation capabilities.

What Drives Employees' Innovative Behaviors in Emerging-Market Multinationals? An Integrated Approach.

The coronavirus disease 2019 (COVID-19) pandemic has severely damaged the global industrial supply chain and accelerated the digital transformation of the global economy. In such rapidly changing environments, multinational corporations (MNCs) should encourage employees to be more innovative in various fields than ever before. With the onset of the COVID-19 pandemic, employees have become psychologically anxious, their working conditions have deteriorated, and they are in danger of losing their jobs. In this study, we aim to address the question of whether servant leadership facilitates the innovative behavior of employees working in emerging-market MNCs when servant leadership is adopted within the firms. In addition, we explore the mediating roles of work–life balance and psychological stability perceived by employees, and the moderating role of organizational climate in the relationship between servant leadership and MNC employees' innovative behavior. In doing so, we collected data from a sample of 307 Chinese employees who are employed by five different Chinese MNCs from the Internet, information technology, electronics, and e-commerce industries. Based on a sample of survey data collected from employees of Chinese MNCs, we empirically test these ideas by specifically examining how servant leadership may shape the innovation behavior of employees in these MNCs. The results suggest that servant leadership positively influences employees' innovative behavior, and that the contribution of servant leadership to employees' innovative behavior is mediated by work–life balance and psychological stability as well as moderated by the degree of organizational climate. Moreover, the different organizational climates of these MNC employees are also expected to significantly shape the relationship between servant leadership and employees' innovative behavior. This study enriches our understanding of the importance of servant leadership in driving the innovative behaviors of employees in emerging-market MNCs and provides new insights into the mechanisms through which emerging-market MNCs can motivate their employees to be more innovative in their jobs. Thus, this study contributes to the research on human resource management by offering important implications vis-à-vis how MNCs manage their employees more effectively in addressing and responding to the dramatically changing global landscape in the post COVID-19 era.

Institutional voids, liability of origin, and presence of women in TMT of emerging market multinationals

This study examines the association between the pervasiveness of institutional voids in emerging markets and the inclusion of women in top management teams (TMTs) by emerging market multinational corporations (EMNCs) as a legitimation strategy. Leveraging institutional theory, we argue that EMNCs increase women presence in TMTs as a legitimation strategy to overcome the challenges of stakeholders' skepticism in foreign markets by disassociating themselves from the image of their home markets. Using a subsidiary level dataset of 1047 EMNCs from 26 emerging countries between 2009 and 2018, we find robust evidence indicating that the pervasiveness of institutional voids at home is positively related to the percentage of women in TMT's EMNCs' foreign units. This effect is particularly stronger for firms operating in countries with high institutional gender parity and low level of corruption.

Do Political Connections Make Good Travel Companions? A Review of Politically Connected EMMNCs

Overseas investments from emerging market multinational corporations (EMMNCs) have stirred debate among stakeholders in host countries, as many such firms possess political connections to their home country governments. Based on a thorough review of the literature, we develop a multi-theoretical framework that identifies, from each major theoretical perspective on this topic, core assumptions, focus, main unit of analysis, factors shaping the strength of home country political connections, mediating and moderating mechanisms, and overseas investment outcomes while synthesizing arguments from major theories used. In the end, we develop an agenda for future research.

The rise of emerging Indian multinationals: strategic learning for EMNC foreign market entry and internationalization

PurposeThe academic literature on emerging market multinational corporations (EMNCs) has classified several strategic options that EMNCs can adopt as part of their internationalization process. Although this research stream does include examples of Indian companies, it has not adequately identified specific strategic practices followed by them as part of their internationalization process. Therefore, this article aims to identify specific firm competencies, home country advantages and strategic practices that Indian EMNCs adopt to achieve foreign market entry and internationalization.Design/methodology/approachThe article adopts a multiple case study methodology supported by unstructured interviews to answer the research question. Using a combination of in-depth interviews and secondary data related to the case study in question, strategic practices of three Indian companies operating in different industry segments are identified and evaluated.FindingsThe results highlight that as part of their internationalization process, EMNCs from India adopt a combination of strategic practices that include strategic alliances, acquisitions, entry into targeted geographic markets, localized and innovative product offerings and niche market focus. This mix of strategic practices, in combination with high levels of corporate parenting, plays an important role in the ability of Indian EMNCs to internationalize successfully.Originality/valueThis study contributes to the international business field by developing a better understanding of the internationalization process followed by emerging market multinational firms. In addition, as the article adopts a case study approach, specific business strategies adopted by Indian firms as part of their internationalization process are identified. The study, therefore, provides a strategic roadmap for firms from emerging countries on how to internationalize successfully.

Chairperson and CEO foreignness and CG quality of emerging markets MNCs: Moderating role of international board interlocks

AbstractWe examine whether foreign chief executive officers (FCEOs) and foreign independent board chairpersons (FIBCs) improve on the corporate governance (CG) practices of emerging market multinational corporations (EMMNCs) through governance spill over. We use hand‐collected data for 80 listed Nigerian multinational corporations for the period 2011–2016 (480 firm‐years) and apply a three‐stage least squares regression to address endogeneity issues. Our findings show international exposure of EMMNCs motivate appointment of FIBCs and FCEOs who positively affect their CG quality. In addition, international board interlocks positively moderate the likelihood of FCEOs to export and enhance EMMNCs' CG quality, but negatively moderate FIBCs impact on CG practices of EMMNCs. Finally, we develop a framework to show how EMMNCs' CG practices are exemplary to local firms in the home country who may mimic these governance practices. We contend the repeated game of governance spill‐over and mimetic isomorphism drives the evolution of CG institutions and, potentially, will generate institutional change in CG practices in emerging markets.

Holistic indigenous and atomistic modernity: Analyzing performance management in two Indian emerging market multinational corporations

AbstractAnalyzing qualitative case‐study data from two emerging market multinational corporations (MNCs) from the Indian pharmaceutical industry, we develop two theoretical frameworks based on goal‐setting and cognitive evaluation theories along with indigenous Indian management theories, including the principles of Ayurveda for analyzing performance management systems in an indigenous and modern pharmaceutical MNC. Data were analyzed from multiple data sources, such as interviews, non‐participant observation, multiple site visits, organizational documents, policies, client testimonials, and publically available information through the website and annual reports. The indigenous firm offered a holistic approach to managing multiple stakeholders. Its overarching performance goal focused on all stakeholders collectively contributing to the patient' and others' holistic well‐being. All employees' and stakeholders' unified and singular efforts dovetailed to achieve physical, mental, emotional, spiritual, and environmental well‐being as a proxy for performance. Organizational values, culture, and contextual influences of informal learning, empowerment, and task variability helped achieve its overarching goals. The Western pharmaceutical firm focused on atomistic, granulated, and an objective way of assessing and evaluating performance, wherein cost‐effectiveness, innovation, and high‐performance were vital performance outcomes. Performance coaching and task invariability adversely affected individual outcomes. Implications for research and practice are discussed.

Political animosity in cross-border acquisitions: EMNCs’ market and nonmarket strategy in a developed market

PurposeMany multinational corporations that originate from emerging economies (emerging market multinational corporations (EMNCs)) opt for acquiring a target firm in a developed market to expediently upgrade their strategic capabilities. To successfully achieve their strategic goals in the developed markets, EMNCs may use market actions and nonmarket actions to mitigate the potential risk derived from the national political differences between their home emerging economy and host developed economy. This paper aims to extend the legitimacy-based view of political risk to study the influence of political animosity – defined as misalignment of the host-home countries’ national interests – on the EMNCs’ market and nonmarket strategy in a developed market.Design/methodology/approachIn this paper, we examine all EMNCs that made cross-border acquisitions of the USA targets from 2005 to 2011. The final sample consists of 252 acquisitions originating from 25 emerging markets. This paper used Tobit regression analysis to test the direct and moderating hypotheses.FindingsFacing a high level of political animosity between their home country and the host developed economy, EMNCs use a market strategy by acquiring less ownership stake in the developed market, as well as engage in a nonmarket strategy by increasing lobbying activities. In addition, because of the heightened legitimacy concerns of developed market shareholders, cross-listed EMNCs have a greater tendency than non-cross-listed EMNCs to improve their legitimacy through their market and nonmarket strategy.Originality/valueThe current paper sheds light on EMNCs’ international strategy in developed markets by examining both market and nonmarket actions. EMNCs are shown to be strongly motivated to engage in acquisitions in developed markets so they can acquire invaluable strategic resources, such as brands and distribution channels, to compete with the developed market multinationals. A sophisticated ownership strategy and corporate political activities are invaluable for EMNCs to catch up with developed market multinationals.

Cultural imprints: Emerging market multinationals’ post-acquisition corporate social performance

Many emerging market multinational corporations (EMNCs) acquire firms in developed markets to attain advanced technology and managerial know-how. However, adopting socially responsible practices may not show immediate financial returns and thus, are potentially overlooked. Given the lack of formal institutions to enforce socially responsible practices in their home country, EMNCs have discretion in improving their post-acquisition corporate social responsibility performance (CSRP). This study extends the institution-based view on EMNCs’ internationalization and investigates how informal institutions, specifically home country cultures, affect EMNCs’ post-acquisition CSRP. Studying a sample of EMNCs’ acquisitions in the U.S., we find that EMNCs’ home country cultures exert “imprinting” effects that enable or discourage their post-acquisition CSRP. Uncertainty avoidance and power distance are positively related to the improvement of EMNCs’ CSRP, while individualism has a marginally negative relationship. Post-hoc analysis suggests that compared to manufacturing firms, service firms are more susceptible to the cultural imprinting effects.