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.

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.

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.

Changing business culture: theory and practice in typical emerging markets

2011 ◽  
Vol 1 (4) ◽  
pp. 1-24
Author(s):  
Stephanie Jones ◽  
Gregory J. Scott
Keyword(s):  
Emerging Markets ◽  
Organizational Behavior ◽  
International Business ◽  
Emerging Market ◽  
Cross Cultural ◽  
Theory And Practice ◽  
Business Culture ◽  
Content Type ◽  
Cultural Management ◽  
Cross Cultural Management

TitleChanging business culture: theory and practice in typical emerging markets.Subject areaOrganizational behavior, human resources, culture, international business, international entrepreneurship and emerging market studies.Study level/applicabilityMBA and MSc students (and some advanced‐level undergraduates) in an MBA module being taught face‐to‐face in an emerging market context. MBA courses such as managing cultural diversity, cross‐cultural management, organizational behavior, human resource management, international business and business in emerging markets. The exercise is also relevant to teaching the subject of assignment‐ and dissertation‐writing, given the element of data collection and analysis.Case overviewThis exercise is designed to be an MBA class exercise in which students try to answer the question: what are the national cultural characteristics of the typical executive or manager in my country? Are these behaviors as the textbooks describe, or have they changed, especially with economic development?The example of country chosen for the class exercise can be any emerging market country, especially one undergoing significant change. Much of the research on cross‐cultural management conducted in emerging markets was carried out 20 or 30 years ago and the changes in emerging markets have been dramatic since then. It is highly likely, when reaching the results of this exercise, that the culture of the chosen country has indeed changed dramatically, becoming more like a typical developed or “emerged” country. Much of the original cross‐cultural management research was also based on a similar group – employees of US‐based high technology companies, arguably similar to the sample to be involved in our exercise here.Expected learning outcomesNational cultural characteristics can be described and defined in ways which will allow for comparisons, to gain useful insights – and these behaviors are not good or bad, just real and different. Cultures can change or stay the same, due to certain demographic, economic and social influences, which we can study and measure. If we proactively interview colleagues and other contacts to test our understanding of these national culture constructs, we can gain more insights and awareness (rather than just listening to a lecture).Supplementary materialsTeaching notes, student assignment.

What do we know about organizational sustainability and international business?

2020 ◽  
Vol 31 (2) ◽  
pp. 292-305 ◽  
Author(s):  
Ana Maria Gomez-Trujillo ◽  
Maria Alejandra Gonzalez-Perez
Keyword(s):  
Sustainable Development ◽  
Emerging Markets ◽  
International Business ◽  
Design Methodology ◽  
Emerging Market ◽  
Organizational Sustainability ◽  
Content Type ◽  
Emerging Market Multinationals ◽  
Sustainability Initiatives ◽  
Corporate Social

PurposeThe purpose of this study is to provide a revision of the literature that links the concepts of sustainability and internationalization in the context of emerging marketsDesign/methodology/approachThe results are presented following the recommendations of Challahan (2014), who introduced the concept of the “Six W” as components of a literature review.FindingsIt can be noted that there are common characteristics among the study of internationalization and sustainability in emerging markets. It is possible to suggest a framework of research that considers internationalization as a driver for the pursuit of sustainability initiatives.Originality/valueThere is an increasing evidence of the inclusion of corporate social responsibility activities and sustainable development on international business. This way, the present paper can serve as a base to understand the internationalization processes of emerging market multinationals (EMNEs) and their commitment to sustainability.

Internationalisation commitment of emerging market firms

2018 ◽  
Vol 25 (2) ◽  
pp. 201-221 ◽  
Author(s):  
Constanza Bianchi ◽  
Jorge Carneiro ◽  
Rumintha Wickramasekera
Keyword(s):  
Latin America ◽  
Emerging Markets ◽  
Latin American ◽  
Structural Equation ◽  
Emerging Market ◽  
Empirical Studies ◽  
Institutional Environments ◽  
Cross Sectional ◽  
Content Type ◽  
Emerging Market Firms

Purpose Enhancing firm commitment towards internationalisation is an important step towards ensuring successful international performance. However, there is limited research on this topic for emerging market firms. The purpose of this paper is to investigate the factors that influence the internationalisation commitment of emerging market firms located in two Latin American countries with different institutional environments. Design/methodology/approach This study proposes and tests a conceptual model that includes drivers and barriers of internationalisation commitment. Data were collected from Chilean and Brazilian firms. The model uses confirmatory factor analysis to develop the underlying multi-item constructs and structural equation modelling to test the model. Findings The results show that managers’ perceptions of firm resources and capabilities are significant drivers of internationalisation commitment in both countries. In addition, perceptions of internal firm-specific barriers, such as a manager’s lack of international experience and knowledge, are negatively related to internationalisation commitment in Chile, but not in Brazil. Finally, external environmental barriers are negatively related to internationalisation commitment in Brazil, but not in Chile. Practical implications The context for the study is Chile and Brazil. Both are important emerging markets in Latin America, with a strong focus on firm internationalisation. The research design is cross-sectional and so does not allow for any causal claims to be made. The findings have important implications for internationalisation efforts of managers and export promotion agencies of emerging markets with different institutional environments. Originality/value This research contributes to the relatively scant but increasing number of empirical studies which investigate emerging market internationalisation in Latin America.

scholarly journals Corporate entrepreneurship of emerging market firms: current research and future directions

2019 ◽  
Vol 22 (1) ◽  
pp. 5-30
Author(s):  
Irem Demirkan ◽  
Qin Yang ◽  
Crystal X. Jiang
Keyword(s):  
Emerging Markets ◽  
Emerging Market ◽  
Corporate Entrepreneurship ◽  
Future Research ◽  
Future Directions ◽  
Content Type ◽  
Strategic Renewal ◽  
Developed Markets ◽  
Current State ◽  
Emerging Market Firms

Purpose The purpose of this paper is to examine the current state of corporate entrepreneurship (CE) of emerging market firms (EMFs) and provide direction for future research on the topic. Design/methodology/approach The authors specifically review the recent literature between the years 2000 and 2019 on CE with the keywords “corporate entrepreneurship,” “emerging economies” and “emerging countries” published in the Australian Business Deans Council list journals. The authors review the existing literature about CE in emerging markets, summarize current achievements and present an agenda for future research. Findings Based on the review, the authors categorized the macro and micro contexts of CE and summarized the current articles on CE in emerging markets within each macro and micro context. The authors conclude that despite the abundance of research on CE that investigates the three prongs of CE in terms of innovation, strategic renewal and new venturing in developed market contexts, there is a scarcity of literature that focuses on CE in emerging markets from a holistic perspective. Originality/value While there is an abundance of literature review on CE in general in terms of the drivers of the construct, the contexts contributing to it and the outcomes, the reviews are lacking about CE specifically within the context of emerging markets. Emerging markets vary from developed markets institutionally, economically, culturally, socially and technologically. However, the questions of how these differences impact the CE activities, as it relates to innovation, venturing and strategic renewal in EMFs, and how these differences provide incentives or hinder the activities that contribute to CE remain mostly unanswered. This paper reviewed the research on CE and emerging market contexts from 2000 to present. It targets to provide a better understanding of the current achievement on this topic and what to be done in the future.

Do cross-border acquisitions involving emerging market firms create value

2014 ◽  
Vol 52 (8) ◽  
pp. 1451-1473 ◽  
Author(s):  
P.C. Narayan ◽  
M. Thenmozhi
Keyword(s):  
Emerging Markets ◽  
Value Creation ◽  
Emerging Market ◽  
Operating Performance ◽  
Relative Size ◽  
Rank Test ◽  
Content Type ◽  
Cross Border ◽  
Emerging Market Firms ◽  
The Impact

Purpose – The purpose of this paper is to contribute to M&A literature by explicitly investigating whether cross-border acquisitions involving emerging markets, either as acquirers or as targets, create value and how is the performance outcome in such acquisitions impacted by deal-specific characteristics. Design/methodology/approach – This study uses industry-adjusted operating performance to measure acquisition gains, the Wilcoxon signed rank test to examine value creation potential and OLS regression to evaluate the impact of deal characteristics on acquisition gains. Findings – The authors find very pronounced value destruction when emerging market firms acquire targets in developed markets, the adverse outcome being further aggravated when the mode of acquisition is “tender offer” rather than a “negotiated deal”. On the other hand, when developed market firms acquire targets from emerging markets, there is an even chance of value creation, the outcome being favourably influenced by the pre-acquisition performance of the two firms, relative size of the target and cash (not stock-swap) as the mode of payment. Originality/value – The findings from this paper offer an important, statistically significant explanation on the value creation potential and the impact of deal characteristics on post-acquisition operating performance in cross-border acquisitions involving emerging market firms. This finding assumes immense significance, given the rapidly changing landscape of global M&A, witnessed through a continuous rise in the volume and value of cross-border acquisitions involving emerging market firms.

The substitute effect of internal R&D and external knowledge acquisition in emerging markets

2020 ◽  
Vol 54 (5) ◽  
pp. 1117-1146
Author(s):  
Tao Wang ◽  
Xue Yu ◽  
Nan Cui
Keyword(s):  
Emerging Markets ◽  
Knowledge Acquisition ◽  
Emerging Market ◽  
Interactive Effect ◽  
Innovation Performance ◽  
Long Term Effects ◽  
Cross Sectional ◽  
Content Type ◽  
External Knowledge ◽  
External Knowledge Acquisition

Purpose This paper aims to provide a new perspective in investigating how internal research and development (R&D) and external knowledge acquisition interact regarding their influence on innovation performance in an emerging market context. Building on an attention-based view (ABV), it argues that internal R&D and external knowledge acquisition can be substitutes for each other in emerging markets. Its contingency factors are also discussed according to the principles of the ABV. Design/methodology/approach The proposed hypotheses were empirically tested using a Tobit model approach. The data used was from the enterprise survey and the follow-up innovation survey conducted by the World Bank in 10 emerging market countries. Findings The results indicate that internal R&D and external knowledge acquisition entails a substitute effect among emerging market firms (EMFs). A higher level of manager’s open-mindedness to external knowledge and firm performance and a lower level of firm administrative control help mitigate the substitute effect of internal R&D and external knowledge acquisition. While adequate financial resources may not necessarily mitigate the substitute effect, it is an essential condition for the external knowledge acquisition to play a role in enhancing innovation performance. Research limitations/implications The research uses a set of cross-sectional data. A dynamic study will provide a deeper understanding of the long-term effects of innovation investments. Practical implications To better use innovation investments, EMFs need to assess their specific conditions and the possible substitute effect of internal R&D and external knowledge acquisition activities. Originality/value Previous research discussing the interactive effect of internal R&D and external knowledge acquisition has mostly focused on an absorptive capacity perspective, which represents a firm’s technical ability. This study argues that these investments not only involve in absorbing knowledge technically but also form a challenge for the limited firm resources and can cause cognitive problems in management, especially for EMFs.

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