Processes Underlying MNE Subsidiary Absorptive Capacity: Evidence from Emerging Markets

This chapter explores the prospects for technology transfer and spillovers from inward investment in the setting of emerging markets. The chapter builds on the large literature on spillovers to explore the drivers of such effects. First, it is necessary to explore why the analysis of technology transfer between inward investors and local firms is important in the context of emerging market development, and also why a different perspective may be required compared with that developed for traditional economies such as the UK or USA. In doing so, the authors explore issues such as absorptive capacity and institutional quality, e.g., the protection of property rights, and link those to the common issues identified by international business scholars and others in terms of the challenges presented by operating in emerging markets. This, in turn, enables them to explore possible policy responses.

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Mergers and acquisitions in emerging markets: What drives absorptive capacity in target firms?

South African Journal of Business Management ◽

10.4102/sajbm.v52i1.2039 ◽

2021 ◽

Vol 52 (1) ◽

Author(s):

Sherilee Pillay ◽

Manoj D. Chiba ◽

Abdullah Verachia ◽

Morris Mthombeni

Keyword(s):

Emerging Markets ◽

Absorptive Capacity ◽

Emerging Market ◽

Knowledge Flow ◽

Target Firm ◽

Strategic Intent ◽

Acquiring Firms ◽

Target Firms ◽

Operational Processes

Purpose: The purpose of this study was to investigate how knowledge flow and productivity affect the absorptive capacity of target firms in emerging markets.Design/methodology/approach: We used self-administered questionnaires to measure absorptive capacity, knowledge flow and productivity constructs. The sample comprised individuals who were employees of firms that completed acquisitions between 2015 and 2017. The acquisitions were publicly announced and the target firms were all in emerging markets.Findings/results: Firstly, our results confirmed the multidimensional nature of absorptive capacity. Secondly, we found a positive correlation between a target firm’s knowledge flow and productivity and its absorptive capacity. Thirdly, our results indicated that knowledge flow and operational processes will support the introduction and integration of external knowledge into a target firm. Therefore, understanding the absorptive capacity of target firms is central to the ability of new and existing knowledge to be assimilated.Practical implications: The realisation of the strategic intent of an acquisition is dependent on effective knowledge flow, supported by efficient communication and operational processes. The target firm’s absorptive capacity is, therefore, a key consideration for acquiring firms. Understanding this will be useful for firms to consider acquisitions of target firms in emerging markets and could potentially enhance their chances of success.Originality/value: This study contributes to the limited body of research on emerging market merger and acquisition activity. It responds to the call for further research to be conducted on emerging markets and the role of absorptive capacity in realising the strategic intent of acquisitions.

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Investigating the influence of absorptive capacity of recipients within cross-border transfer of knowledge: evidence from emerging markets

International Marketing Review ◽

10.1108/imr-11-2020-0264 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Hina Mehreen ◽

Hussain Gulzar Rammal ◽

Vijay Pereira ◽

Manlio Del Giudice

Keyword(s):

Emerging Markets ◽

Absorptive Capacity ◽

Cellular Network ◽

Transfer Of Knowledge ◽

Content Type ◽

Highly Educated ◽

Cross Border ◽

Using Data ◽

Survey Responses ◽

The Relationship

PurposeThis study aims to investigate whether the absorptive capacity, learning intent of the recipient, the attractiveness of the knowledge source and the relationship quality between the recipient and the source in high-technology sectors in emerging markets influences the nature of the intra-organizational knowledge being transferred.Design/methodology/approachA total of 180 completed survey responses from all cellular network providers operating in Pakistan were analyzed. This study uses multiple regression analysis to empirically tests the above relationships using data from the cellular network sector in Pakistan.FindingsThe findings highlight how the highly educated workforce and the motivation to learn has an impact on the effective cross-border sharing of knowledge, both technological and marketing knowledge.Originality/valueThis study is one of the few to test the factors that influence the effective and efficient transfer of knowledge from developed to emerging markets.

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