Running out of steam on emerging markets? The limits of MNE firm-specific advantages in China

2018 ◽  
Vol 26 (3) ◽  
pp. 207-224 ◽  
Author(s):  
Louise Curran ◽  
Lee Keng Ng
Keyword(s):  
Emerging Markets ◽  
Market Entry ◽  
Multinational Enterprises ◽  
Market Access ◽  
Emerging Market ◽  
Local Networks ◽  
Content Type ◽  
Over Time

Purpose The purpose of this paper is to explore the extent to which the firm-specific advantages (FSAs) which underlie international expansion have proved resilient for European multinational enterprises (MNEs) operating in a key emerging market – China. Design/methodology/approach The authors adopt a qualitative, case study approach, using interview data to explore the companies’ FSAs on market entry, how they evolved over time and the strategies adopted to defend them. They undertook 15 in-depth interviews with decision makers in six companies addressing their experience since market entry. To control for sector-level effects, the authors focus on companies in the environmental protection sector. Findings The authors found examples of significant erosion of the FSAs among the case study companies, which undermined their position on the host market and their long-term competitiveness. The key sources of erosion were limitations in market access, exclusion from local networks and the emergence and upgrading of local competitors, often firms with whom the MNEs had collaborated in the past. Research limitations/implications The relatively small number of cases (six) limits the generalisability of the findings by the authors. However, the authors are convinced that, given that the case companies are generally large and have long experience in China, the conclusions made are well grounded. In addition, there was the high level of coherence in the reported experiences of the interviewees, providing further support for the findings. Practical implications The experience of these case study companies highlights that MNEs have difficulty retaining their unique FSAs when faced with rapidly evolving local competition in a key emerging market. Key strategies mobilised included focussing on a sub-sector of the market and localising both the company and their supply chains. The difficulties experiencing by these case study companies in retaining their FSAs underline the need for MNEs in emerging markets to avoid complacency and constantly innovate, but they also raise questions about their capacity to extend their international reach in the long term. Originality/value Very few studies have explored the FSAs of firms and how they evolve over time using a case study-based qualitative approach, especially in emerging markets.

The influence of motivations on international location choice in least developed, emerging and developed countries: evidence from Chinese MNEs

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Fernando Angulo-Ruiz ◽  
Albena Pergelova ◽  
William X. Wei
Keyword(s):  
Emerging Markets ◽  
Multinational Enterprises ◽  
Location Choice ◽  
Emerging Market ◽  
Developed Countries ◽  
Asia Pacific ◽  
Institutional Constraints ◽  
Least Developed Countries ◽  
Content Type ◽  
Developed Economies

Purpose This research aims to assess variations of motivations when studying international location decisions. In particular, this study aims to assess the influence of diverse motivations – seeking technology, seeking brand assets, seeking markets, seeking resources and escaping institutional constraints – as determinants of the international location choice of emerging market multinational enterprises (EM MNEs) entering least developed, emerging, and developed countries. Design/methodology/approach The authors develop a set of hypotheses based on the ownership–location–internalization framework and complement it with an institutional perspective. The conceptual model posits that the different internationalization motivations (seeking technology, seeking brand assets, seeking markets, seeking resources and escaping institutional constraints) will impact the location choice of EM MNEs in developed economies, emerging markets or least developed countries. This study uses the 2013 survey data collected by the China Council for the Promotion of International Trade and the Asia Pacific Foundation of Canada. The final sample of analysis of this research includes 693 observations. Findings After controlling for several variables, two-stage Heckman regressions show there is a variation of motivations when EM MNEs enter least developed countries, emerging markets and developed economies. EM MNEs are motivated to enter least developed countries to seek markets and resources. Conversely, those firms enter developed countries in their search for technological assets and to escape institutional constraints at home. While the present study findings show a clear difference in the motivations that lead to location choice in least developed vs developed countries, the results are not as clear for location in other emerging countries. Research limitations/implications The paper offers empirical support for the importance of motivations as crucial determinants of location choice. Originality/value This paper provides a detailed quantitative study on the internationalization location choice of EM MNEs based on their motivations. Though theoretical models underscore the importance of motivations, we know very little about how, in practice, motivations drive location choice. This study contributes to the international location choice literature a deeper understanding of how diverse motivations drive choices of expansion into developed economies, emerging markets or least developed countries.

Digital platforms in Russia: competition between national and foreign multi-sided platforms stimulates growth and innovation

2019 ◽  
Vol 21 (2) ◽  
pp. 129-145 ◽  
Author(s):  
Yaroslav Eferin ◽  
Yuri Hohlov ◽  
Carlo Rossotto
Keyword(s):  
Emerging Markets ◽  
Business Models ◽  
Emerging Market ◽  
Policy Framework ◽  
Policy Objective ◽  
Content Type ◽  
Digital Platforms ◽  
Digital Platform ◽  
Winner Takes All

Purpose This paper aims to test the “winner-takes-all” vs the “winner-takes-some” scenarios in digital platform competition dynamics in emerging markets. Design/methodology/approach This paper uses an analytical reference framework to assess the emergence of digital platforms in Russia, including four elements: definition of multi-sided platforms (MSPs), platform enablers, business models and competitive dynamics. Findings This paper concludes that Russia shows that a healthy competition between national and foreign MSPs led to the emergence of a shared equilibrium, where local platforms were able to retain a significant, often majority, share vis-à-vis foreign and global platforms. Research limitations/implications This paper stands as a counterpoint to the widespread conviction that digital platform dynamics will result into a “winner-takes-all” scenario and dominance of global platforms. Practical implications This case study offers practical data and analysis that can be used to create a baseline and evaluate the dynamics of digital platforms in emerging markets. It offers data, trends and evidence on Russia’s digital economy. Social implications This research provides a logical framework to help policymakers take decisions on a policy framework to regulate platforms in emerging markets. The good outcome of competition between local and foreign platforms should emerge as a policy objective to achieve in most emerging markets. Originality/value This case study is the first baseline to assess the dynamics of competition between national and foreign digital platforms in the Russian market. It is one of the first papers to tackle the market of digital platforms in an emerging and developing economy. It tries to address the debate between “winner-takes-all” and “winner-takes some” competition equilibrium through a concrete case study in an important G20 emerging market economy.

IKEA Inc.: the India way

2020 ◽  
Vol 10 (1) ◽  
pp. 1-9
Author(s):  
Neetu Yadav
Keyword(s):  
Emerging Markets ◽  
Competitive Advantage ◽  
Learning Outcomes ◽  
Emerging Market ◽  
Local Environment ◽  
Global Strategy ◽  
International Strategy ◽  
Content Type ◽  
Academic Level

Learning outcomes Learning outcomes are as follows: to learn about the application of Bartlett and Ghoshal’s model of international strategy; to compare and contrast the global strategy of IKEA in India and China; and to understand how adaptability can create a new competitive advantage in emerging markets. Case overview/synopsis The case study enables discussion about the global strategy of a well-established multi-national company, IKEA in an emerging market. IKEA is a well-established and well-known brand in the international market in furniture retailing. It has decided to make a debut in India in 2017 with its first store in Hyderabad. However, it was yet to open it in 2018. The case emphasizes upon understanding the global strategy of IKEA, positioning itself in the fragmented Indian furniture industry, managing differences in emerging markets and adapting to the local environment of the particular country. The case highlights how adaptability can create a new competitive advantage in managing global strategy in different countries of emerging markets. Complexity academic level This case study is developed for post-graduate management programs as an MBA, Executive MBA and executive development programs. Supplementary materials Teaching Notes are available for educators only. Subject code CSS 11: Strategy.

FDI inflows and intellectual property rights for MNEs in emerging markets: an alternative approach through the lens of trademarks in Vietnam (1986-2016)

2020 ◽  
Vol 28 (4) ◽  
pp. 483-519
Author(s):  
Amy Linh Thuy Nguyen
Keyword(s):  
Intellectual Property ◽  
Emerging Markets ◽  
Multinational Enterprises ◽  
Emerging Market ◽  
Research Process ◽  
Intellectual Property Right ◽  
Intangible Asset ◽  
Ip Protection ◽  
Fdi Inflows ◽  
Content Type

Purpose While the current anti-globalisation wave is considered as a regional and cyclical relapse among Western countries, the new era of globalisation has shifted away from stagnant developed economies towards the rising prosperity of emerging Asia, where it is attracting substantial global inward foreign direct investment (FDI). Focussing on Vietnam, the country that is seen as Asia’s next economic tiger, the question of how important intellectual properties (IP) protection is in the international competition for FDI inflows is still unsettled, especially on the under-researched topic of trademarks. Design/methodology/approach This paper takes on the business history approach, which allows rich evidence from the dynamic and evolving natures of multinational enterprises (MNEs) to drive the research process, so that international business scholars can test models rigorously. The evidence provided in this paper is essentially qualitative and combines trademark registrations data, with trade and FDI statistics between 1986 and 2016, also draws on companies’ archives, industry reports and related newspaper articles. Findings This paper provides the chronology of intellectual property right (IPR) legal landscapes and the dynamic co-evolution of trademarks and FDI inflows in Vietnam. Three trademark protection strategies for MNEs and their patterns here are addressed. The paper also argues that trademarks bring new insights and IP protection strategy for pharmaceutical MNEs for the case of Vietnam is as important in trademarks as it is in patents. In emerging markets with strong incentives for FDI such as Vietnam, MNEs are not necessarily put off by weak IPR, but rather create alternative strategies for dealing with the lack of IP protection in these emerging market settings. Originality/value This study challenges the stream of thoughts that view trademarks as a “neglected intangible asset” among different IPRs, while in fact, trademarks advance MNEs’ knowledge by ensuring competitiveness and long-run survival in emerging markets. This paper is among the first few attempts to look at pharmaceutical industry through the lens of trademarks, moving away from the traditional patent-focussed approach. It extends the understanding of OLI paradigm and highlights that MNEs need to possess Oa and Op advantages not only at the beginning of internationalisation process but rather evolving through the time to cope with imitation risks in the host country.

scholarly journals Subsidiary banks in emerging markets: how strong is the coordination on a group-wide basis?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Małgorzata Iwanicz-Drozdowska ◽  
Bartosz Witkowski
Keyword(s):  
Emerging Markets ◽  
Performance Management ◽  
Emerging Market ◽  
Robustness Analysis ◽  
Capital Adequacy ◽  
Series Data ◽  
Content Type ◽  
Financial Performance Measures ◽  
Asset Quality

PurposeThe parent-subsidiary nexus has been explored since the mid-1990s, but the extent to which subsidiaries resemble their parents remains unclear. Therefore, this study examines the performance drivers for subsidiary banks in emerging markets and their parents to determine the similarities between these groups. The findings could help identify key financial performance measures that should be included in global strategies for multinational banks operating in emerging markets.Design/methodology/approachThe study uses data on subsidiaries from 32 countries, including 20 European transitioning countries and 49 parent companies operating internationally from 1996 to 2015. It considers several models that distinguish between units using individual bank effects and the stochastic structure. In a robustness analysis, EU- and non-EU-based institutions are distinguished and long-term historical links between parents' and subsidiaries' countries are considered.FindingsCost control, capital adequacy and asset quality policies have similar importance for parent banks and subsidiaries and are strictly coordinated, whereas the remaining policies allow more flexibility. Subsidiaries in the EU and in countries that were politically and/or militarily influenced by parent countries do not “fall far from the tree”, which signals their strong group-wide integration and coordination.Research limitations/implicationsThis study covers a limited number of emerging market countries due to the limited availability of long-term series data. Future studies should include more countries.Originality/valueThis study identifies key financial measures used on a group-wide basis for performance management while accounting for long-term relations between host and home countries and the geopolitical characteristics of host countries.

Loyalty cards, credit options and economic market development

2020 ◽  
Vol 48 (6) ◽  
pp. 591-607
Author(s):  
Stephan Zielke ◽  
Marcin Komor
Keyword(s):  
Emerging Markets ◽  
Emerging Market ◽  
Credit Cards ◽  
Emerging Countries ◽  
High Price ◽  
Private Debt ◽  
Content Type ◽  
Product Categories ◽  
Developed Markets

PurposeThis paper analyses three strategies in customers’ use to afford consumption in a developed and an emerging market for different product groups. The strategies are: (1) usage of loyalty cards, (2) usage of credit cards and (3) usage of long-term credits.Design/methodology/approachMall intercept surveys conducted in Poland (emerging market) and Germany (developed market) provide data for testing a set of hypotheses using ANOVAs.FindingsResults show that customers in emerging markets show no differences in the usage of loyalty cards for product categories with high shopping frequency (groceries) compared to developed markets, while in all other product categories loyalty card usage is stronger. Results show further that in low price categories, customers in emerging markets use credit card payments more often compared to customers in developed markets. In high price categories, they use credit cards less often, but long-term credits more often.Research limitations/implicationsResults have implications for the design of loyalty programs and payment options in different markets. Results have also implications for public policy regarding concerns about increasing private debt in emerging countries.Originality/valueThis paper suggests a cost-benefit framework where customers in emerging countries perceive benefits of loyalty cards and credit options higher, while they are willing to bear higher costs. As a result, effects of product category characteristics on usage that are observable in developed markets do not exist in emerging markets.

An integrated-dynamic mode of entry model: global MNEs entering into emerging markets

2020 ◽  
Vol 30 (1) ◽  
pp. 97-107 ◽  
Author(s):  
Bolortuya Enkhtaivan ◽  
Zagdbazar Davaadorj
Keyword(s):  
Emerging Markets ◽  
Conceptual Model ◽  
Emerging Market ◽  
Integrated Approach ◽  
Policy Implications ◽  
Dynamic Mode ◽  
Content Type ◽  
Mode Of Entry ◽  
Entry Model

Purpose The purpose of this paper is to develop a conceptual model for the mode of entry in a particular case of global MNEs entering into emerging markets. Design/methodology/approach The conceptual model builds on institutional theory and follows an integrated approach of entry mode theories using bargaining theory, the liability of foreignness and local legitimacy. Findings The conceptual model introduces five propositions. Research limitations/implications The study has policy implications for emerging market institutions. Also, the model highlights the significance of long-term vision in global MNEs’ sustainability. However, the model excludes the MNEs’ internal institutions, home country institutions, as well as institutional and cognitive distances. Originality/value The conceptual model addresses the dynamics of MNEs’ entry decisions with long-term strategic vision. It helps to recognize the global MNEs’ internalization of the host country’s formal and informal institutions when the bargaining power is in imbalance.

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.

scholarly journals Interactive Network Branding: demonstrating the importance of firm representatives for small and medium-sized enterprises in emerging markets

2020 ◽  
Vol 35 (7) ◽  
pp. 1179-1189 ◽  
Author(s):  
Nikolina Koporcic
Keyword(s):  
Multinational Firms ◽  
Single Case ◽  
Emerging Market ◽  
Corporate Identity ◽  
Research Approach ◽  
Content Type ◽  
Business Partners ◽  
Interactive Network

Purpose The purpose of this paper is to explore Interactive Network Branding (INB) in an emerging market (EM) context while focusing on the importance of firm representatives for small- and medium-sized enterprises (SMEs). The INB corresponds to the process of interpersonal interaction which results in corporate identity and reputation creation that SMEs ultimately use to influence their network positions. Design/methodology/approach This single case study presents four Croatian SMEs embedded in a business network. A research model of INB serves as an analytical tool for analyzing the phenomenon in its context. The key unit of analysis is an SME represented by its manager(s). Findings Contrary to large multinational firms that have financial capabilities for branding departments and recruitment of brand managers, SMEs in EMs tend to focus more on creating long-term relationships with their fundamental business partners. Through INB and interactions between firm representatives, corporate branding becomes an inherent part of networking. Thus, the study acknowledges the importance of INB, being implemented through firm representatives, as it plays a crucial role in the survival and success of SMEs in the EM context. Research limitations/implications Based on the chosen research approach and the focus on the Croatian EM, the findings might lack generalizability. Hence, further research is necessary to examine the applicability of INB in different empirical contexts. Practical implications This paper provides implications for practitioners coping with networking and branding processes of SMEs that are operating in fast-changing EMs. Originality/value This study provides a deeper understanding of INB while focusing on the importance of firm representatives and their interactions that have an influence on the networking and branding processes of all the parties involved.

A qualitative case study of MNE legitimacy

2016 ◽  
Vol 11 (1) ◽  
pp. 42-56 ◽  
Author(s):  
Kathryn Pavlovich ◽  
Paresha N Sinha ◽  
Mark Rodrigues
Keyword(s):  
Multinational Enterprises ◽  
Joint Venture ◽  
Qualitative Case Study ◽  
Emerging Market ◽  
Milk Powder ◽  
Moral Obligations ◽  
Institutional Voids ◽  
Content Type ◽  
Corporate Scandal

Purpose – An international joint venture (IJV) helps multinational enterprises (MNEs) overcome the “liability of foreignness.” However, in the presence of institutional voids, MNE’s overreliance on the local partner can result in the MNE unwittingly becoming involved in a corporate scandal. The purpose of this paper is to discuss the causes, impacts and outcomes on the MNE’s legitimacy following a corporate scandal. Design/methodology/approach – Using secondary data, this paper presents a qualitative case study of the Fonterra-Sanlu milk-powder scandal in China. Findings – The paper identifies the institutional voids that contributed to the scandal. It also examines the effects of the scandal on the MNE’s legitimacies and evaluates the appropriateness of its actions in China during the formation, erosion and repair stages of its legitimacy. Research limitations/implications – It contributes to legitimacy literature by discussing the importance of MNE’s active commitment when entering the emerging market. It argues that the building of pragmatic legitimacy is not sufficient, and explains why attendance to moral obligations is part of building moral and cognitive legitimacy. Originality/value – This unique case study of a corporate scandal offers deep insights into how, what and why questions regarding how the three forms of legitimacy are necessary for improving IJV performance by MNEs operating in emerging economies. It particularly highlights the importance of moral legitimacy as a mechanism for overcoming institutional voids.

Sign in / Sign up

Export Citation Format

Share Document