Liabilities of regionalization and the emerging market firm

2016 ◽  
Vol 31 (3) ◽  
pp. 146-163
Author(s):  
Keith J. Kelley
Keyword(s):  
Multinational Enterprises ◽  
Design Methodology ◽  
Strategic Behavior ◽  
Emerging Market ◽  
Diversification Strategy ◽  
Firm Level ◽  
Content Type ◽  
Strategic Impact ◽  
Strategic Options ◽  
Emerging Market Firms

Purpose The purpose of this paper is to revisit the causal relationships of the liabilities of inter-regional foreignness to show that the process of regionalization itself has affected firms’ strategic capabilities and focus. The constraints of these regions, a consequence of regionalization that limits the strategic options of multinational enterprises, are known as the liabilities of regionalization (LOR). Design/methodology/approach This study reviews previous literature and uses a mixture of theory and inference to make propositions regarding the existence of liabilities attributable to the regionalization process. The propositions discuss macro-level, and industry and firm-level strategic impact on firms of Triad and non-Triad regions. Findings It is argued specific emerging market attributes, in relation to the developed Triad regions, will influence strategic focus of those emerging market firms. This in turn will also influence global strategic behavior and capabilities in the future, creating additional LOR in some cases and reducing them in others. Originality/value Previous scholars have focused on the liabilities of inter-regional and regional foreignness and its effect on international diversification strategy both upstream and downstream. This study attempts to explain the formation of regions that shape the FSAs that limit global strategic diversification, which are characterized as the LOR. More importantly, it discusses them from perspective of emerging market firms, which on the outside of the Triad regions, may form their own regions and FSAs.

Ownership participation of cross-border mergers and acquisitions by emerging market firms

2015 ◽  
Vol 53 (1) ◽  
pp. 221-246 ◽  
Author(s):  
Monica Yang
Keyword(s):  
Mergers And Acquisitions ◽  
Cultural Distance ◽  
Emerging Market ◽  
Foreign Market ◽  
Foreign Market Entry ◽  
Firm Level ◽  
Content Type ◽  
Cross Border ◽  
Emerging Market Firms ◽  
The Relationship

Purpose – The purpose of this paper is to adopt a multi-level approach to investigate what factors shape the content of emerging market firms’ foreign market entry decisions, particularly the ownership participation in cross-border mergers and acquisitions (M&As). In addition, the author would like to know if companies from emerging markets that possess higher (or lower) ownership in cross-border M&As receive higher valuation in the market. Design/methodology/approach – Using panel data of cross-border M&As by emerging market firms from 2000 to 2012, the author tests the hypothesized effects of the independent variables on the level of ownership participation; and uses a standard event study methodology to assess the market reaction of a particular cross-border M&A deal. Findings – The author finds that a country-level factor (institutional distance), an industry-level factor (industry unrelatedness) and a firm-level factor (board concentration) have significant impact on ownership participation in cross-border M&As. The author also finds that investors do give high valuation to those emerging market firms that chose high ownership participation in cross-border M&As. However, the author did not finds the support for the relationship between ownership participation and cultural distance. Neither did the author finds the support for the relationship between ownership participation and board independence. Originality/value – This study enhances the understanding of conditions under which the level of ownership participation in cross-border M&As would increase (decrease) and how the market reacts to high (low) ownership participation of cross-border M&As by emerging market firms.

How does liability of origin influence cross-border acquisition completion? Evidence from Chinese firms

2022 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Tingting Jiang ◽  
Buyun Yang ◽  
Bo Yang ◽  
Bo Wu ◽  
Guoguang Wan
Keyword(s):  
Multinational Enterprises ◽  
Home Country ◽  
Emerging Market ◽  
Organizational Legitimacy ◽  
Binary Logistic Regression Model ◽  
Firm Level ◽  
Content Type ◽  
Low Level ◽  
Cross Border ◽  
Chinese Mnes

Purpose The environment of international business (IB) and the capabilities of emerging market multinational enterprises (EMNEs) as well as their home countries have changed significantly, leading to some new features of liability of origin (LOR). This paper aims to extend the LOR literature by particularly focusing on the LOR of Chinese multinational enterprises (MNEs) and by taking into account the heterogeneity among industries and across individual MNEs. Design/methodology/approach Based on the stereotype content model and organizational legitimacy perspective, this study explores how LOR influences Chinese MNEs’ cross-border acquisition completions. Several hypotheses were tested by using a binary logistic regression model with panel data techniques based on data of 780 Chinese MNEs’ acquisition deals between 2008 and 2018. Findings The results of this study show that when the competence dimension of China’s LOR is perceived as high in the host country, Chinese MNEs are less likely to complete cross-border acquisitions. Moreover, deals are less likely to be completed when the warmth dimension of China’s LOR is perceived to be low. Global experience and the foreign-listed status of individual Chinese MNEs can alter the relationship between the LOR and deal completions. Originality/value This study advances and enriches the LOR research. It shows that a high level of competence in the home country has led to LOR for Chinese MNEs rather than the low level of competence proposed by existing LOR studies; and the LOR for Chinese MNEs is also determined by the perceived low level of warmth in the home country resulting from the geopolitical conflicts between two countries. In addition, the LOR suffered by EMNEs could vary based on certain industry- and firm-level characteristics. The findings of this study provide important practical implications for emerging economy governments and for firms intending to go abroad.

Internationalisation strategies of emerging market firms: evidence from Sarawak, Malaysia

2022 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yaa Serwaa-Akoto Amoah ◽  
Fidella Nga Huong Tiew ◽  
Ching Seng Yap
Keyword(s):  
Emerging Markets ◽  
Design Methodology ◽  
Qualitative Methodology ◽  
Emerging Market ◽  
Structured Interviews ◽  
Content Type ◽  
Top Managers ◽  
Emerging Market Firms ◽  
Internationalisation Strategies

Purpose This study aims to explore the internationalisation paths and strategies adopted by firms from an emerging market and serves as a step towards examining the suitability of prevailing internationalisation theories in the context of emerging market firms. Design/methodology/approach This study adopted a qualitative methodology and gathered data through in-depth semi-structured interviews with 15 top managers of internationalised firms from the East Malaysian state of Sarawak. Data were analysed thematically. Findings The results revealed that the internationalisation strategies of firms from Sarawak can be classified under three main categories: motivations and markets, modes and measures. The constraints the firms faced were important determinants of their internationalisation strategies. The internationalisation paths and strategies of the firms were also found to exhibit both similarities to and deviations from the tenets of prevailing internationalisation theories. Originality/value The study contributes knowledge to the literature of both internationalisation theories and internationalisation strategies of emerging markets, in particular, it advances Fey et al.’s (2016) Five M Framework.

Wanted: strategic partners for young firms eager to enter foreign markets

2020 ◽  
Vol 41 (1) ◽  
pp. 3-10 ◽  
Author(s):  
Lili Mi ◽  
Yuanfei Kang ◽  
Yulong Liu
Keyword(s):  
Structural Equation ◽  
Multinational Enterprises ◽  
Emerging Market ◽  
Developed Countries ◽  
Content Type ◽  
Investment Projects ◽  
Wholly Owned Subsidiary ◽  
Emerging Market Firms ◽  
Chinese Foreign Direct Investment ◽  
Practical Implications

Purpose This paper aims to investigate the relationship between strategic asset-seeking intent and firms’ entry strategies of foreign investment in the context of emerging market firms. Design/methodology/approach This study is based on survey data of 392 Chinese foreign direct investment projects. Structural equation modelling is used for data analysis. Findings With stronger strategic asset-seeking intent, emerging market multinational enterprises are likely to locate their subsidiaries in developed countries, use a wholly owned subsidiary mode and invest with greater intensity, while they do not have a clear preference in entry timing. Practical implications The strategic asset-seeking intent applies not only to emerging market firms but also to small and medium firms in general that have limited resources and a need to catch up with stronger competitors. This study therefore provides guidance to these firms. Originality/value This study contributes by investigating how the strategic asset-seeking intent affects firms’ strategies. The findings have practical implications for strategic managerial decisions that lead to sustained competitive advantage and improved firm performance.

Subnational institutions and EMNE acquisitions in advanced economies: institutional escapism or fostering?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rishika Nayyar ◽  
Shameen Prashantham
Keyword(s):  
Multinational Enterprises ◽  
Emerging Market ◽  
Foreign Market ◽  
Firm Level ◽  
Indian States ◽  
Content Type ◽  
Market Choice ◽  
Advanced Economies ◽  
Institutional Influences ◽  
Socioeconomic Consequences

Purpose The purpose of this paper is to examine whether subnational market-supporting institutions in Indian states affect the likelihood of Indian multinational enterprises (MNEs) to undertake acquisitions in advanced economies (AEs) rather than emerging economies (EEs) and, if so, which mechanism – institutional fostering or escapism – underlies the phenomenon. Design/methodology/approach The paper uses a logistic regression model on a dataset of 647 firm-level cross-border acquisitions (CBAs) undertaken by Indian MNEs during the period 2010–2016. Findings The paper finds support for the institutional escapism mechanism, as opposed to the institutional fostering mechanism, underlying Indian MNEs’ acquisitions in AEs (rather than EEs). That is, firms headquartered in Indian states where market-supporting institutions (such as economic liberalization and efficiency of legal systems) are weak are more likely to undertake CBAs in AEs than in EEs as an escapist response to weak subnational institutions at home. Originality/value The paper highlights the relevance of the mainstream international business (IB) concept of emerging market multinational enterprises (EMNEs) internationalization to critical IB scholarship by examining subnational institutional influences on EMNEs’ foreign market choice between AEs and EEs. In particular, by providing evidence for the institutional escapism mechanism which has potential negative socioeconomic consequences in the region of the investing firm, the paper adds to critical IB research which places great emphasis on the examination of inequalities and draws attention to the EMNE context as a suitable setting for further research on internationalization from a critical perspective.

Springing from where? How emerging market firms become multinational enterprises

2018 ◽  
Vol 13 (3) ◽  
pp. 568-585 ◽  
Author(s):  
Jean-François Hennart
Keyword(s):  
Bargaining Power ◽  
Multinational Enterprises ◽  
Design Methodology ◽  
Western Europe ◽  
Market Access ◽  
Emerging Market ◽  
Content Type ◽  
Emerging Market Multinationals ◽  
The Usa ◽  
Conceptual Paper

Purpose The purpose of this paper is to show that existing theories, principally Dunning’s OLI model, Mathews LLL model and Rugman’s version of internalization theory are unable to explain the rise of emerging market multinationals (EMNEs). The reason is that they over-emphasize the strategic importance of intangibles and ignore that of complementary local assets. Taking complementary local assets into account makes it possible to understand why EMNEs are able to finance their intangible-buying sprees and, often with the help of their governments, to swap market access for technology. Design/methodology/approach This is a conceptual paper based on the bundling model (JIBS 2009) and backed by the case histories of four EMNEs. Findings The author shows that EMNEs have much better prospects vis-à-vis established MNEs than generally thought in Western Europe and the USA and that they will become serious competitors. Originality/value This is, as far as the author knows, the first explanation of why EMNEs have the bargaining power and the resources necessary to swap or buy technology from established MNEs.

Motives for foreign direct investment: a view from emerging market multinationals

2015 ◽  
Vol 23 (1) ◽  
pp. 77-86 ◽  
Author(s):  
Pavida Pananond
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Multinational Enterprises ◽  
Emerging Market ◽  
Global Value Chains ◽  
Value Chains ◽  
Content Type ◽  
Emerging Market Multinationals ◽  
Emerging Market Firms ◽  
Selection Of

Purpose – The purpose of this paper explains how the framework on motives of foreign direct investment (FDI) needs to be rethought when analyzing emerging market multinational enterprises (EMNEs). It argues that the weak position of emerging market firms and their interdependent relationship with lead firms in global value chains (GVCs) modify the selection of internationalization motives. Design/methodology/approach – The arguments are illustrated through a critical review of the literature on FDI motives and a discussion on how the literature can be extended from looking through the lens of emerging market multinationals, particularly those with early development as suppliers in global value chains. Findings – The weak position of emerging market firms and their interdependent relationship with lead firms in global value chains modify the selection of internationalization motives on two aspects. First, internationalization decisions of EMNEs in GVCs are not undertaken in an independent manner. Rather, decisions are influenced by the initial position along the value chain and the dynamic relationships that these EMNEs have with lead firms. Second, the selection of FDI motives of these EMNEs reflects both their international expansion strategy and the upgrading effort they wish to pursue to undertake higher value-adding activities along the GVCs. Originality/value – These implications addressed in this paper add more nuances to the interpretation of FDI motives. Previously viewed mainly from the perspective of lead firms, FDI decisions are considered as independent alternatives that multinational enterprises (MNEs) can undertake to fulfill their internationalization strategy. Revisiting the FDI motives from the perspective of EMNEs reveals further insights on the interdependent nature of their internationalization, particularly reflecting the weaker position of EMNEs and their interdependent relationship with lead firms in their industry.

scholarly journals Internationalisation of emerging market firms: an exploratory study of Chilean companies

2014 ◽  
Vol 9 (1) ◽  
pp. 54-78 ◽  
Author(s):  
Constanza Bianchi
Keyword(s):  
Latin American ◽  
Exploratory Study ◽  
Design Methodology ◽  
Theoretical Foundation ◽  
Emerging Market ◽  
Industry Data ◽  
Foreign Markets ◽  
Resource Based View ◽  
Content Type ◽  
Emerging Market Firms

Purpose – This paper aims to explore how firms from a Latin American market internationalise using the resource-based view of the firm as a theoretical foundation. Specifically, it examines the internationalisation process of three Chilean companies that have become relevant international players. Design/methodology/approach – Drawing on interviews with company managers, as well as industry data and corporate reports, this paper provides insights into the successful internationalisation process of emerging market firms. Findings – The findings of this study suggest that specific capabilities and resources, such as belonging to a family conglomerate, domestic and foreign partnerships and networks, innovation and market orientation, and an experienced management team, are required for emerging market firms to internationalise and improve their performance in foreign markets. Originality/value – This study is one of the few to address the internationalisation process of Chilean companies.

Uncommoditizing strategies by emerging market firms

2019 ◽  
Vol 27 (2) ◽  
pp. 141-177 ◽  
Author(s):  
Alvaro Cuervo-Cazurra ◽  
Jorge Carneiro ◽  
Diego Finchelstein ◽  
Patricio Duran ◽  
Maria Alejandra Gonzalez-Perez ◽  
...  
Keyword(s):  
Latin American ◽  
Cost Efficiency ◽  
General Framework ◽  
Design Methodology ◽  
Emerging Market ◽  
International Competitiveness ◽  
Analytical Framework ◽  
Content Type ◽  
Proposed Model ◽  
Emerging Market Firms

Purpose This paper aims to analyze how emerging market firms upgrade their capabilities by focusing on “uncommoditizing strategies” that enable them to achieve levels of international competitiveness beyond the comparative advantages of their home countries and serve markets with premium pricing, quality and reputation of products. Design/methodology/approach In this paper, the authors studied 18 Latin American companies across six countries. Latin America represents an ideal setting because many of these countries have traditionally developed using natural resource endowments, and their firms have tended to rely on these in their internationalization. To facilitate the analysis of each case and the comparisons across cases, the authors used the same analytical framework for the companies, identifying the sources of differentiation and cost efficiency strategies that enabled these firms to upgrade their capabilities and compete on the basis of premium pricing, quality and reputation. Findings The analysis identified a general framework that represents an abstraction of the actions taken by these companies over time. The proposed model consists of three main elements used to pursue uncommoditizing strategies: tropicalized innovation, global efficiency and coordinated control. Originality/value Recent research on emerging market firms has shown interest in how these firms upgrade their capabilities. This paper contributes to this stream of research by providing an overarching framework that not only bridged previous narrower studies but also explained how firms can develop uncommoditizing strategies to upgrade their capabilities. Further, this paper helps managers by providing a comprehensive yet succinct overview of the main strategies that they can use to help their firms to achieve international competitiveness.

Understanding decoupling in response to corporate governance reform pressures

2015 ◽  
Vol 23 (4) ◽  
pp. 369-382 ◽  
Author(s):  
Mario Krenn
Keyword(s):  
Corporate Governance ◽  
Design Methodology ◽  
Good Governance ◽  
Regulatory Change ◽  
Compliance Monitoring ◽  
Governance Reform ◽  
Firm Level ◽  
Content Type ◽  
Good Corporate Governance ◽  
Actual Use

Purpose – The purpose of this article is to explain under what circumstances firm-level adoption of codes of good corporate governance will more likely be superficial rather than substantive in nature. The article contains lessons for any agency or country that attempts to implement deep and lasting changes in corporate governance via codes of good corporate governance. Design/methodology/approach – The article reviews the literature on compliance with codes of good corporate governance and develops a conceptual model to explain why some firms that have formally adopted a code of good governance decouple this policy from its actual use. Findings – Decoupling in response to the issuance of codes of good corporate governance will be more attractive to firms and also more sustainable under the following conditions: firms’ compliance costs are relatively high firms’ costs of outright and visible non-compliance are relatively high and outsiders’ compliance monitoring costs are relatively high. Originality/value – The article contributes to the debate on compliance and convergence and provides policymakers with a conceptual framework for assessing the likelihood of successful regulatory change in corporate governance.

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