Emerging Market Multinational Enterprises Research Articles

Accelerate or delay? Big step internationalization and the speed of subsequent foreign expansion—evidence from Chinese MNEs

Purpose In recent decades, emerging market multinational enterprises (EMNEs) have predominantly adopted a big step internationalization strategy to expand their business overseas. This study aims to examine the effect of big step internationalization on the speed of subsequent foreign direct investment (FDI) expansion for EMNEs. The authors also investigate the potential boundary conditions. Design/methodology/approach The authors use the random effects generalized least squares (GLS) regression following a hierarchical approach to analyze the panel data set conducted by a sample of publicly listed Chinese firms from 2001 to 2012. Findings The findings indicate that implementing big step internationalization in the initial stages accelerates the speed of subsequent FDI expansion. Notably, the authors find that this effect is more pronounced for firms that opt for acquisitions as the entry mode in their first big step internationalization and possess a board of directors with strong political connections to their home country’s government. In contrast, the board of director’s international experience negatively moderates this effect. Practical implications This study provides insights into our scholarly and practical understanding of EMNEs’ big step internationalization and subsequent FDI expansion speed, which offers important implications for firms’ decision-makers and policymakers. Originality/value This study extends the internationalization theory, broadens the international business literature on the consequences of big step internationalization and deepens the theoretical and practical understanding of foreign expansion strategies in EMNEs.

Emerging market multinationals’ embeddedness in Global South countries: an empirical study of Chinese MNEs in Peru

Purpose This paper aims to investigate how emerging market multinational enterprises (EMNEs) are integrating and expanding into other emerging market host countries, focusing on Chinese mining companies in Peru. Design/methodology/approach Adopting a qualitative approach, an in-depth analysis of two Chinese state-owned enterprises’ strategies was conducted, building on stakeholder theory and the business ecosystem perspective. Findings This study reveals a reliance on high-level political lobbying rather than localized engagement strategies. However, findings point to increasing grassroots resistance among local stakeholders, undermining EMNEs’ bargaining power. Originality/value This paper argues for a paradigm shift toward inclusive, cooperative “translocal governance” approaches as empowered communities gain voice. Key contributions include advancing theoretical understanding of changing stakeholder relationships and power configurations in emerging countries, underscoring the rising significance of microlevel sociocultural embeddedness for MNE success and highlighting practical imperatives for EMNEs to embark on rapid localization strategies in Latin America. By elucidating multilayered integration realities in Peru, this interdisciplinary study yields contextualized insights and enriches perspective on the conditions and pathways for EMNEs to build sustainability in Global South emerging market environments.

Emerging market MNEs, digital transformation and ESG performance: evidence from China’s listed companies

ABSTRACT The importance of emerging market multinational enterprises’ (EM-MNEs) social responsibility has been realized in the literature, but how to enhance EM-MNEs’ ESG (Environmental, Social, and Governance) performance in the digital age has attracted limited attention. This article fills this gap by investigating whether EM-MNEs can improve ESG performance through digital transformation among Chinese listed companies. We employ text analysis techniques to measure the degree of digital transformation within MNEs and further construct a fixed-effects (FE) model to investigate the positive influence of digital transformation on EM-MNEs’ ESG performance. Results show that digital transformation within MNEs is positively related to ESG performance and such effect is verified for non-state-owned enterprises but not for state-owned enterprises. We suggest that MNEs with more foreign subsidiaries are more prone to be influenced by the positive effect of digital transformation on ESG performance than MNEs with fewer foreign subsidiaries. Moreover, the Belt and Road Initiative is valuable for MNEs to reap ESG benefits from digital transformation. The findings enrich international business studies by adding the digital economy and ESG to the discussion. Moreover, they provide valuable implications for policymakers and business leaders in emerging markets by delineating strategies for enhancing the ESG performance of EM-MNEs.

The Impact of Formal and Informal Institutional Distances on the Strategic Asset Seeking Motives of Chinese Multinational Enterprises: An Analysis of Patent and Trademark Acquisitions

This study was to examine the influence of specific contributory variables within formal versus informal institutional distances on the sub-motives of emerging-market multinational enterprises’ (EMNEs) strategic-asset seeking (SAS), in order to gain insights into the behaviours and motivations of increasing outward foreign direct investment (OFDI) from emerging economies like China. From a multinomial logistic regression analysis of both firm and macro-level data, it was found that private business groups (PBGs) were more likely to target and acquire firms with patents and trademarks. The findings also suggest that the informal cultural distance was significantly associated solely with the EMNEs’ motive for seeking companies with trademarks but no patents. The association between formal institutional distance with EMNEs’ SAS behaviours was not significant. The findings also revealed that certain sub-dimensions of formal and informal cross-national distance had significant effects on overseas specific SAS behaviours. These findings inform further exploration of determinants of EMNEs’ SAS behaviours and provide a more comprehensive understanding of EMNEs’ internationalization trends. This research contributes to the current literature on EMNEs and provides practical and managerial implications for EMNE decision-makers while investing abroad.

How does rapid internationalization explain emerging-market multinationals' innovation? The moderating role of organizational capacity

PurposeThe purpose of this study is to investigate the impact of rapid internationalization by emerging-market multinational enterprises (EMNEs) on their innovation performance. It also seeks to identify any potential moderating factors that could influence this relationship.Design/methodology/approachBy analyzing data from listed Chinese MNEs from 2012 to 2022, this study applies a negative binomial regression model to test the research hypotheses.FindingsThis study uncovers an inverted U-shaped relationship between the internationalization speed of EMNEs and their innovation performance. It also suggests that strong absorptive, learning and managerial capacities could play positive moderating roles in the effect of internationalization speed on EMNEs’ innovation performance.Originality/valueThis study highlights rapid global expansion, promoting new knowledge acquisition for EMNEs. However, due to time-compression dilemmas with limited EMNE firm-specific advantages, overly accelerated internationalization hinders learning effectiveness. Additionally, this study reveals the critical importance of three firm-specific capacities in EMNEs – absorptive, learning and managerial capacities – in efficiently assimilating newly acquired knowledge from foreign markets and enhancing their innovation performance through rapid internationalization.

Do It Right the First Time? Exploring the First Cross-border Acquisition and Expansion Frequency of Emerging Market Multinationals

Abstract Do it right the first time! But, how? Current dialogue on the expansion of emerging market multinational enterprises (EMNEs) is pervasive. Nonetheless, it ought to have examined strategic attributes and the speed of implementing different strategies for their first venture. Drawing on the springboard perspective, this study tests the impact of EMNEs' first cross-border acquisition (CBA) strategy and speed on their consequential expansion frequency and performance. We also examine the boundary conditions of comparative nationalism between countries, in view of the resurgence of nationalism in an era of deglobalization. Findings reveal that EMNEs' rapid adoption of a focused strategy for their first CBA increases their expansion frequency, while the adoption of a conglomerate strategy decreases it. These relationships are affected in reverse by high comparative nationalism, and the performance consequences of expansion vary with firms using different strategies for their first attempt. This study enriches the EMNE literature and highlights the role of national ideologies in international business research.

Geopolitical risk and foreign subsidiary performance of emerging market multinationals

In recent years, enterprises have faced increasing uncertainty due to rising geopolitical risks. This paper examines the impact of geopolitical risk (GPR) in host countries on the performance of foreign subsidiaries of A-share-listed Chinese multinational enterprises (MNEs) from 2003 to 2020. The results show that the GPR of host countries negatively affects the foreign subsidiary performance of Chinese MNEs. The deteriorated local business environment acts as a channel for this negative relationship. Moreover, such a negative relationship is mitigated for listed firms with more international experience and senior executives with an overseas background, when the foreign subsidiaries do not operate in sensitive industries or when there is a better institutional environment in the host countries. This study extends the literature on how external uncertainty affects the performance of foreign subsidiaries of emerging market multinational enterprises. It also sheds light on the internationalization of firms through the management of international uncertainty.

Becoming a Multilatina: strategic capabilities as necessary conditions for the internationalization of Latin American firms

PurposeThis study aims to challenge the generic interpretation of Multilatinas as Latin American firms that have been able to internationalize because of highly competitive strategic capabilities. The authors test whether capabilities that international business researchers commonly associate with internationalization are necessary at different stages of the internationalization process to better understand the extent to which emerging market (EM) firms need to develop them.Design/methodology/approachInternational business research suggests a positive association between strategic capabilities and firm internalization. However, it remains unclear what specific capabilities are necessary and when they are necessary. These questions are particularly important in the context of the internationalization of firms from emerging economies, such as Latin America. The authors apply necessary condition analysis (NCA) on a sample of Latin American firms at different internationalization stages to test what strategic capabilities represent necessary conditions for becoming a Multilatina.FindingsThe findings suggest that only a few strategic capabilities are necessary for Latin American firms to become “Multilatinas”. While entrepreneurial orientation and marketing and sales capabilities represent necessary conditions, EM firms may internationalize even though other capabilities are developed to a lesser extent. The authors reflect on how shifts in local markets and technology drive the emergence of different types of Multilatinas.Research limitations/implicationsMeasuring strategic capabilities across multiple EM firms implies a risk that firm-specific aspects are not fully captured. While the authors focused on the comparative competitive strength of capabilities and took great care to minimize measurement error, the authors acknowledge possible bias. Also, while NCA does not require a minimum sample size, findings from our sample of firms from four countries may not generalize to the region or other EMs.Originality/valueAs a relatively new statistical technique, the use of NCA has spread rapidly. To the best of the authors’ knowledge, the linkage between organizational capabilities and firm internationalization has not been tested from a necessary conditions perspective yet. The reflections on the “Multilatina” concept based on the notion of EM firms as configurations of strategic capabilities inform current debates on EM multinational enterprises.

Sustainable strategy as a lever for corporate legitimacy and long-term competitive advantage: an examination of an emerging market multinational

PurposeThe purpose of this paper is to examine the process of integrating sustainability into the corporate strategy of an emerging market multinational enterprises (EMNE) to achieve and maintain corporate legitimacy over time. The research explores how deploying a corporate sustainability strategy enhances the company’s long-term competitive relevance by creating and maintaining corporate legitimacy and transferring practices based on sustainable development goals within the organization.Design/methodology/approachThe study adopts a qualitative single-case design, focusing on a corporate energy services company (Interconexión Eléctrica S.A.) operating in volatile, uncertain and turbulent environments.FindingsThe findings indicate that integrating sustainability into the corporate strategy enables subsidiaries to effectively meet global requirements, considering internal and external pressures. This integration also fosters the development of unique capabilities and the internalization of standards, addressing liabilities in foreign markets, thus providing a competitive advantage and safeguarding corporate legitimacy among stakeholders.Originality/valueThis research contributes to the international business literature by providing insights into strategy development and implementation in EMNEs. Specifically, it demonstrates how a Latin American emerging multinational enterprise (multilatina) adopts new sustainability strategies to enhance its business competitiveness. The study also offers guidance for emerging market companies on developing sustainability strategies and transferring them to subsidiaries operating in complex institutional environments. Furthermore, the research provides a rationale for governments and civil society organizations on why firms are committed to sustainability, highlighting its positive impact on firm’s competitiveness and survival in international markets.

Chinese SMEs’ location choice and political risk: The moderating role of legitimacy

International business studies show that multinational enterprises generally invest in locations with fewer political risks, but that this may not always apply to emerging-market multinational enterprises, due to the specific characteristics of their home countries. In this paper, we examine the impact of political risk on the location decisions of Chinese small and medium-sized enterprises (SMEs), and explore the legitimacy of firms from China in different host countries as a moderator of the relationship between political risk and location choice. Our empirical investigation is based on an original database of 617 foreign direct investment (FDI) location-choice decisions made by 240 Chinese SMEs between 2006 and 2017. The results show that political risk deters Chinese SMEs from choosing certain locations, but political and economic legitimacy positively mitigate this relationship. Combining the political institutions approach and legitimacy-based view of political risk, we contribute novel insights into the role of legitimacy of firms from the same country of origin in emerging market SMEs’ strategic choices of FDI location.

Articles: Are emerging market MNEs more attracted towards better patent enforcement regimes when undertaking greenfield R&D-focused FDI?

Articles: Are emerging market MNEs more attracted towards better patent enforcement regimes when undertaking greenfield R&D-focused FDI?

Subsidiary divestment of EMNEs – Does home country matter?

This research is a response to a call for studies addressing the issue of de-internationalization in the context of emerging countries. It does so by examining the divestment of foreign subsidiaries of Brazilian multinational firms. Adopting the Institutional-Based View and Dunning’s Investment Development Path, the study investigates whether institutional characteristics of the home country environment influence the divestment of emerging market multinational enterprises. The results indicate that receiving governmental financial support to establish foreign subsidiaries can lead to higher rates of divestment. Furthermore, divestment tends to be higher when an enterprise’s home country counterparts are divesting from the same host country. Conversely, having market supporting institutions in the home country diminishes the likelihood of foreign divestment.

Impact of Green Innovation on Emerging Market Multinational Enterprises’ Foreign Direct Investment

Impact of Green Innovation on Emerging Market Multinational Enterprises’ Foreign Direct Investment

Does Rapid Internationalization Enhance Innovation Performance of Emerging Market MNEs?

Does Rapid Internationalization Enhance Innovation Performance of Emerging Market MNEs?

Knowledge creation capability under different innovation-investment motives abroad: The knowledge-based view of international innovation management

This paper focuses on knowledge creation capability and motives for international investment by emerging-market multinational enterprises (EMNEs) innovating in emerging markets. It analyses the motives for the relatively underresearched innovation-intensive investment by non-Chinese EMNEs in Central and Eastern Europe and offers new insights to the knowledge-based view of international innovation management. Building on interviews with senior managers from 11 EMNEs from India, Brazil, Russia, South Africa, Malaysia, and South Korea, this qualitative study develops, through a hybrid thematic analysis approach, a knowledge-based capability perspective on managing knowledge creation under different innovation-investment motives abroad, including knowledge seeking, market seeking, and dual motives. Knowledge creation capability includes knowledge integration, knowledge sharing, and knowledge cocreation. Both internal and external dimensions of knowledge creation capability are conceptualised, along with elements linking internal and external dimensions, namely managerial orchestration and innovation projects. The paper contributes to the knowledge-based view of firm innovation and global strategy by stressing the roles of international innovation-investment motives and organisational capabilities for creating and managing knowledge in EMNEs. It offers implications for managing subsidiaries of multinational enterprises involved in innovation in emerging markets, particularly regarding enhancing and linking the internal and external dimensions of subsidiaries’ knowledge creation capability via ambidexterity.

Configuring International Growth of Emerging Market Multinational Enterprises: A Compositional Springboarding View in the Context of India

AbstractThe rapid international growth of emerging market multinational enterprises (EMNEs) has become widely researched in the international management field. The compositional springboarding view (CSV) provides a theoretical understanding of amalgamation‐ambidexterity‐adaptability elements that impact EMNEs' internationalization. Here we utilize the CSV to conduct a configurational analysis of factors explaining Indian firms' rapid international growth. Using fuzzy‐set qualitative comparative analysis (fsQCA) of a survey‐archival data set matched with a sample of listed manufacturing firms from India, we identify five configurational solutions for Indian multinational enterprises (MNEs) to achieve international growth. We further develop a taxonomy of Indian MNEs' CSV configurations supporting rapid international growth that we name as amalgamator, adapter, augmentor, explorer, and springboarder. Through the configurational approach, we extend the EMNE literature in the international management field by exploring the efficacy and complementarity of compositional springboarding factors that enable Indian MNEs' rapid international growth. We also contribute to the organization theory and strategy literatures by addressing the tension alleviation between reconfiguring existing resources and creating new ones. Our theoretical extension opens new opportunities for CSV to guide strategic analyses across various resource reuse and creation scenarios.

Ownership effects on direction of multinationality: Evidence from Indian EMNEs

AbstractAn essential yet challenging decision that emerging market multinational enterprises (EMNEs) must make when setting up a subsidiary abroad is whether to do it in developed or emerging market economies. The extant literature has rarely probed what influences the location choice of EMNEs' outward investments. This paper aims to address this gap and hypothesizes that large shareholdings by promoters or foreign institutional investors negate agency problems (due to managerial risk aversion) and enhance the propensity to pursue risky but value‐accrediting upmarket strategies. Furthermore, this paper argues that these beneficial effects of large owners are significantly weaker for group‐affiliated firms compared to their standalone counterparts. We test our proposed hypotheses using a proprietary, longitudinal dataset during 2007–2013 for 213 Indian multinational firms and find support for our arguments.

Springboard internationalisation in times of geopolitical tensions

Geopolitical tensions and a world where state interventions are driven by national security and ideology present novel challenges for emerging market multinational enterprises (EMNEs). Often, individual companies are targeted, and their corporate growth gets curbed. These phenomena are derived from non-market factors, which are generally absent in the springboard view of the international business discourse that explains the foreign expansion of EMNEs by viewing these firms as ambidextrous organisations capable of handling conflicting requirements. This research aims to understand the international expansion of EMNEs under geopolitical tensions by incorporating non-market factors into the ambidexterity model to enrich the springboard view. A case study of Huawei and its exclusion from the telecommunications industry in Sweden forms the empirical base of this research. The contributions are twofold. First, within the springboard view, the ambidexterity model can be upgraded by incorporating non-market factors that better explain the international expansion of EMNEs in changing geopolitical and business contexts. Second, the research highlights the management of EMNEs' subsidiaries while considering geopolitical tensions.

Internationalization of emerging market multinational enterprises: A systematic literature review and future directions

Emerging market multinational enterprises (EMNEs) has received an increased scholarly inquiry considering its unprecedent rise that shape the new worldwide economy. In response, this study is aimed to synthesize empirical findings by conducting a systematic and an integrative review of the existent research on the internationalization in the context of emerging market multinationals during the period 1994–2020. Relying upon a systematic review methodology, 77 studies were subjected to a critical assessment of theoretical, methodological, and empirical aspects, covering conceptual approaches, antecedents, dynamics, and outcomes of internationalization, within the context of emerging multinationals. Empirical evidence elucidates that internationalization of EMNEs is still far from reaching maturity due to the lack of a synthetic theoretical foundations, discrepancies among research methodologies, and the fragmented nature of research results. To strengthen these areas, this paper signals fruitful future research endeavours that are particularly worth exploring.

Determinants of Foreign Direct Investment and the Advantages Theory

This study reviews three classic international business theories and some related empirical studies to identify the gaps in the literature and suggest future research directions. In international business studies, most analyses on the determinants of FDI are centered on three concepts of firm-specific, internalization, and location advantages according to the monopolistic advantage theory, internalization theory, and OLI paradigm. These three advantages determine whether a firm will internationalize, how it will enter foreign markets, where it will locate in the host country, and how it will perform in a foreign market. However, These theories are set up with the premise of firm-specific advantages and cannot be used to explain the phenomenon of emerging market multinational enterprises, which have emerged in large numbers in recent years. Simultaneously, these theories, which focus on manufacturing, need to be used to explain the internationalization of the service industry in-depth and with greater relevance.