Dear friends and colleagues,
The special issue of Journal of International Management on the internationalization process and emerging market multinationals is out! Thanks to the authors and reviewers for their contributions to it. You can read it at https://www.sciencedirect.com/journal/journal-of-international-management/vol/27/issue/3.
Alvaro and Peter
Journal of International Management
Enriching internationalization process theory: insights from the study of emerging market multinationals
Edited by Peter Gammeltoft, Alvaro Cuervo-Cazurra
Volume 27, Issue 3,
Peter Gammeltoft, Alvaro Cuervo-Cazurra
We argue and explain how the study of emerging market multinational companies can help enrich our understanding of the internationalization process. Firms' internationalization process is a central and enduring theme in international business. However, most of the theoretical models are built on the analysis of advanced economy multinationals. Emerging market multinationals differ crucially in the role that the home country plays in their behavior, resulting in different patterns of internationalization. We propose that the discussion of the applicability of extant theory can be advanced by differentiating internationalization theories according to three different ontological perspectives: resource oriented, transaction oriented, and process oriented. We further suggest that the study of emerging market multinationals' internationalization processes reveals three contextual accelerators: government, catch-up, and global value chains. These accelerators help adapt internationalization process models to new contextual realities.
Home country learning and international expansion of emerging market multinationals
Chinmay Pattnaik, Deeksha Singh, Ajai S. Gaur
Operating in the home country provides firms with substantial experience and learning opportunities. Emerging market economies provide a rich context in terms of diversity of sub-national institutions, competitors, consumers, and business networks. Operating in such context enables EMNEs to experience and learn about developed and underdeveloped institutions, building relationships with firms within and outside of their networks, customers with diverse income levels, tastes and preferences, and competition from firms with multiple ownership groups. The experience and learning that EMNEs gain from such diversity in their home environments assist them in their international expansion. Focusing on the pre-internationalization stage, we identify different aspects of home country diversity that facilitates EMNE internationalization. Additionally, we discuss the firm-specific contingencies that enable or restrict learning from home environments.
Making Geographic Dispersion Work for Emerging Market MNEs
Yadong Luo, Vladislav Maksimov, Juan Bu
A growing body of research probes into the unique ownership advantages of emerging market MNEs (EMNEs) to uncover the sources of their counterintuitive success, when judged from the perspective of traditional theories in international business. Although research documents that EMNEs expand into spatially distant countries to prompt a global catch-up in competitiveness, how such geographic dispersion results in improved performance remains unclear. Per the springboard perspective, adaptability and ambidexterity may facilitate post-springboard success. We advance this logic, submitting that EMNEs fulfill adaptability advantages through strategic agility, and ambidexterity advantages through structural mediums that support adaptive integration. We propose that these strategic and structural enablers foster a positive relationship between geographic dispersion and performance. Our study is based on data from 220 MNEs headquartered in China. The results indicate that strategic agility, integration capability, and autonomy delegation promote the positivity of geographic dispersion. These findings enlighten EMNE research in organizing post-springboard activities that involve geographically dispersed operations.
The role of springboarding in economic catch-up: A theoretical perspective
Peter Enderwick, Peter J. Buckley
This paper offers a taxonomic examination of the springboard perspective, outlining three upgrading paths pursued by emerging market firms – path following, path creating and path compressing. The choice of the upgrading path is determined primarily by home-country conditions including market size and growth, innovative capability, government intervention, and market and institutional imperfections. We find that "springboarding" is a strategy most likely to be adopted by path-compressing firms and least likely to be observed among path-creating firms.
Deepening the timing dimension of emerging market multinational companies' internationalization – An exploratory perspective
Antonin Ricard, Katsuhiko Shimizu, Marion Vieu
Building from the nascent debate pertaining to the internationalization trajectories followed by EMNCs, this article proposes to better understand behaviors of multinational companies from emerging markets (EMNCs). A database containing the complete internationalization trajectory of 110 firms was created to analyze sequence patterns. Optimal matching technique helped us to build a taxonomy of seven distinct sequence patterns (serial acquirers, late acquirers, sequential acquirers, contractual internationalizers, collaborative internationalizers, opportunistic internationalizers, wholly owned internationalizers). Our findings partially confirm previous works pertaining to the internationalization process of EMNCs and shed a light on atypical behaviors which have not been studied yet. These findings allow us to obtain new insights, deepening our understanding of theories depicting how EMNCs behave such as springboard theory and the Linkage Leverage Learning framework. We also provide recommendations to MNC managers and for public policy.
Organizational learning, unlearning and re-internationalization timing: Differences between emerging- versus developed-market MNEs
Irina Surdu, Rajneesh Narula
Not all firms are successful in internationalizing their operations; many withdraw, and some make a second attempt (after an appropriate 'time-out'). We compare the re-internationalization of emerging market multinationals (EMNEs) with developed market multinationals (DMNEs) to investigate key differences. Although DMNEs may have greater experience in internationalization, with supposedly superior market-specific knowledge, this does not always have positive effects and may be a disadvantage for re-entry. We find that not all types of market-specific experience are beneficial for re-entry. Being able to unlearn past experiences associated with the initial entry may be just as valuable a firm-specific advantage (FSA) for re-entrants. EMNEs are not necessarily at a disadvantage when re-internationalizing because, compared to their developed market counterparts, they have less to 'unlearn' as they often lack deeply embedded routines associated with international heritage. We also find EMNEs are less deterred by under-performance from the initial entry and are likely to re-internationalize more rapidly than DMNEs. EMNEs, given their newness and absence of deeply embedded routines, are less likely to be victims of inertia.
Commentary: Emerging multinational business enterprises and development of dynamic governance capabilities
Jan-Erik Vahlne, Jie Wu
Host countries' level of development and internationalization from emerging markets: A typology of firm strategies
Host countries' level of development affects internationalization from emerging markets. The challenges and opportunities firms face, the resources and assets they need, and ultimately how they internationalize are shaped by whether firms internationalize to developing or developed countries, and whether they operate within a single or across multiple levels of host country development. I propose a typology of four firm strategies to deal with different host location types: local optimization, global consolidation, brokering and niche filling. Local optimization happens when firms seek out less competitive markets in similar and lower income countries, managing institutional and infrastructural challenges through collective action. Firms seeking global consolidation manage their limited capabilities and legitimacy through mergers and acquisitions as they springboard from low to high income host locations. Suppliers in global value chains and the customer-facing partners of advanced multinationals in low income countries are arbitrageurs between high and low income countries. They use brokering to avoid head-on competition with advanced multinationals, but to grow, firms must retain their primary relationships while developing non-competing relationships. Niche filling involves firms targeting knowledge-intensive offerings at lucrative high income markets, managing their smaller resource base vis-à-vis competitors through non-equity or digitally-enabled modes of internationalization. Firms can simultaneously use different strategies for different types of foreign markets.
Breaking the looking glass: Understanding how emerging market multinationals develop unique firm-specific advantages
Work on firm-specific advantages developed by emerging market multinationals largely focuses on their ability to copy those created by similar companies from the developed world. The predominance of new institutional economics in this field has limited our understanding of how these firms develop different firm-specific advantages by presuming not only that the institutional context in advanced industrialized countries is the best for creating such advantages, but also that local context does not shape the potential effectiveness of any such advantage. This article argues that comparative institutionalism better enables scholars to understand this phenomena. However, until now this theory has only examined how firm-specific advantages are derived from country-specific advantages. I argue that it needs to be revised so that it can account for how emerging market multinationals develop firm-specific advantages suited to emerging markets by building on their experience in addressing what this author terms location disadvantages. It illustrates this argument by examining how an Argentine Multilatina, IMPSA, was able to outperform its competitors from the developed world and become the leading producer of dams and windmill parks in Latin America by addressing location disadvantages in supplier markets.
Internationalization pathways of Chinese private firms: A closer look at firm-specific advantages
Nigel Driffield, Jun Du, Meng Song
Using a unique date set, we explore the internationalization processes of Chinese private sector firms. We show that variations in internationalization of private Chinese firms can be better explained by traditional internationalization theories than by the typical approach proposed in the recent literature that centers on state-created advantages. The firm-specific advantages of productivity, proprietary knowledge, and technology competence explain Chinese private foreign direct investment (FDI) in a similar way as they do typical FDI from western developed countries. Further, firm-specific advantages such as technology leadership, exporting experience, and ability to signal quality to partners abroad can explain differently motivated outward FDI by private Chinese firms. Our results fill an important gap in the literature, where the validity of the existing frameworks for explaining the internationalization of Chinese multinationals is hampered by the conflation of state-sponsored internationalization, knowledge-seeking FDI, and firm-specific advantages.
Exploring the internationalization strategies of Turkish multinationals: A multi-perspective analysis
Yuksel Ayden, Ekrem Tatoglu, Keith W. Glaister, Mehmet Demirbag
Drawing on a multi-perspective framework integrating the dynamic capabilities view, the resource-based view, and the industry-based view, we study the internationalization process of emerging country multinational enterprises (EC MNEs). A multiple-case study research method was adopted to explore the internationalization strategies of a set of EC MNEs from Turkey with a specific focus on the enabling role of dynamic capabilities (i.e., sensing, seizing, reconfiguring) in their international expansion. The findings identify four non-mutually exclusive internationalization strategies (infiltration, catch-up, extender, and challenger), representing trajectories that EC MNEs pursue to expand their foreign operations. We contribute to research on the internationalization of EC MNEs by illustrating and comparing the variations in respect to their strategic behaviors.
Board political ties and firm internationalization
Sergey Lebedev, Sunny Li Sun, Lívia Markóczy, Mike W. Peng
How do political ties of the board directors influence firm internationalization? Board political ties have both the buffering effect (beneficial) and the binding effect (generating costs and obligations towards the government) in emerging economies where firms may strongly depend on the government. We propose that these two effects may coexist in emerging economies, and thus the benefits of board political ties exceed the costs only at a certain level of board political ties. We predict that such joint influence of these two effects on firms' ability and motivation to internationalize may result in a U-shaped relationship. We test this prediction with a sample of Chinese firms. We further predict and test for moderating effects of slack resources and structural holes in firms' ego network of interlocking directors, which allow firms to access key resources via alternative means.
------------------------------Alvaro CUERVO-CAZURRAProfessor, International Business and Strategy, Northeastern UniversityCo-editor, Global Strategy Journala.firstname.lastname@example.org. www.cuervo-cazurra.com.------------------------------