Coevolution of home country support and internationalization of emerging market firms

2021 ◽  
pp. 101809
Author(s):  
Chui Shiam Chan ◽  
Chinmay Pattnaik
Keyword(s):  
Home Country ◽  
Emerging Market ◽  
Emerging Market Firms

The dual effect of foreign competition on emerging market firms' internationalization

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Hongquan Chen ◽  
Saixing Zeng ◽  
Chongfeng Wu ◽  
Haiping Fu
Keyword(s):  
Environmental Factors ◽  
Home Country ◽  
Emerging Market ◽  
Foreign Competition ◽  
Host Countries ◽  
Content Type ◽  
Negative Effect ◽  
Emerging Market Firms ◽  
Foreign Competitors ◽  
Positive Effect

PurposeThe authors develop a theoretical framework of how foreign competition in a firm's home country jointly interacts with other environmental factors to influence the internationalization pace. This study moves beyond the debate on whether foreign competition promotes or inhibits the internationalization pace by unpacking the nature of pace across strategic and operational dimensions. By differentiating the internationalization paces of market scope and international commitment, the study results show that foreign competition has a positive effect on the former and a negative effect on the latter. This indicates that the determinants of different paces are conditional upon the different knowledge types among foreign competitors.Design/methodology/approachUsing a panel data set of Chinese construction corporations over the period from 2009 to 2015, the authors extend previous research on the effect of home country environment on internationalization behavior in an emerging economy by examining the effects of the interplay between foreign competition in home country and industrial contexts. The authors also explore the moderating effect of subnational institutions on the relationship between foreign competition and internationalization pace. They use a Poisson model and a GEE model to examine the main effects and moderating effects involved.FindingsThe results indicate that industry dynamism strengthens the positive effect of foreign competition and the pace of market scope, while industry munificence weakens the negative effect of foreign competition and the pace of international commitment. The authors’ findings support the coexistence of “pushing” and “pulling” effects of environmental factors from a firm's home country. The authors extend the argument of “institutional escapism” by focusing on subnational institutions. They show that firms located in a region with a low level of marketization are more likely to respond by accelerating the pace of their international expansion to escape from their home country.Originality/valueThe authors’ findings have implications for practitioners and policymakers working with emerging market firms (EMFs). The authors suggest that local governments should consider building high-quality institutions that can reduce the possibility of investment opportunities escaping EMFs. The authors’ findings indicate that international knowledge from foreign competitors may also assist EMFs in understanding more about the cultural environment before entering host countries, although it cannot help them to resolve cultural uncertainty when operating in host countries. Hence, managers should carefully evaluate their competitiveness before they decide to engage in global competition at an accelerated rate.

When does informal finance help exports of emerging market firms? A contingent perspective

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nitin Pangarkar ◽  
B. Elango
Keyword(s):  
Emerging Markets ◽  
International Business ◽  
Home Country ◽  
Emerging Market ◽  
Interactive Effect ◽  
Informal Finance ◽  
Content Type ◽  
Time Period ◽  
Emerging Market Firms ◽  
Formal Finance

Purpose The purpose of this study is to examine whether the usage of informal finance helps exports of emerging market firms. Design/methodology/approach The study analyzes a large dataset of observations on emerging market firms. To address the issue of a non-random sample and correct for self-selection in the regression analyzes, this paper uses the two-stage Heckman procedure. In the first stage, this study uses a sample of 74,148 firms from 135 countries over an 11-year time period (2006 to 2016). In the second stage, which includes only firms involved in exports, the analyses are based on 13,608 observations on firms from 135 countries over the same time period. Findings The study finds that the usage of informal finance helps exports of emerging market firms. Furthermore, the interactive effect between informal finance and home country affluence also influences exports. Research limitations/implications The analyses do not account for destination market characteristics such as size and growth. Practical implications The study suggests that emerging market firms should not shy away from using informal finance which can often be more convenient, and sometimes cheaper, than formal finance. Informal finance’s timeliness might be particularly useful for pursuing strategies such as exporting. Originality/value Studies in international business implicitly assume that finance is available for pursuing strategies such as exports or foreign direct investment. However, formal finance is scarce in emerging markets. By drawing a linkage between informal finance and exports in emerging markets, the study adds to the international business literature. The study also examines joint and interactive effects of home country characteristics and deployment of informal finance on exporting.

Home country underdevelopment and internationalization

2017 ◽  
Vol 27 (3) ◽  
pp. 217-230 ◽  
Author(s):  
Alvaro Cuervo-Cazurra ◽  
Ravi Ramamurti
Keyword(s):  
Emerging Markets ◽  
Comparative Advantage ◽  
Home Country ◽  
Emerging Market ◽  
Content Type ◽  
Emerging Market Multinationals ◽  
Economic Underdevelopment ◽  
Conceptual Paper ◽  
Practical Implications ◽  
At Home

Purpose The purpose of this study is to use the rise of emerging-market multinationals as a vehicle to explore how a firm’s country of origin influences its internationalization. Design/methodology/approach This paper is a conceptual paper. Findings We argue that the home country’s institutional and economic underdevelopment can influence the internationalization of firms in two ways. First, emerging-market firms may leverage innovations made at home to cope with underdeveloped institutions or economic backwardness to gain a competitive advantage abroad, especially in other emerging markets; We call this innovation-based internationalization. Second, they may expand into countries that are more developed or have better institutions to escape weaknesses on these fronts at home; we call this escape-based internationalization. Research limitations/implications Comparative disadvantages influence the internationalization of the firm differently from comparative advantage, as it forces the firm to actively upgrade its firm-specific advantage and internationalize. Practical implications We explain two drivers of internationalization that managers operating in emerging markets can consider when facing disadvantages in their home countries and follow several strategies, namely, trickle-up innovation, self-reliant innovation, improvisation management, self-reliance management, technological escape, marketing escape, institutional escape and discriminatory escape. Originality/value We explain how a firm’s home country’s comparative disadvantage, not just its comparative advantage, can spur firms its internationalization.

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