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Extending theory by analyzing developing country multinational companies: Solving the Goldilocks debate

Published on Aug 1, 2012in Global Strategy Journal 2.73
· DOI :10.1111/j.2042-5805.2012.01039.x
Alvaro Cuervo-Cazurra32
Estimated H-index: 32
(College of Business Administration)
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Abstract
I analyze how the study of developing country multinational companies (DMNCs) can help extend theory. The renewed interest in DMNCs has generated a ‘Goldilocks’ debate, with one camp arguing that the analysis of DMNCs is ‘hot’ and requires new theory, another camp arguing that it is ‘cold’ and no new theory is required, and a third camp arguing that it is ‘just right’ and it can be used to extend theory. I follow this third camp and argue that the unique conditions of developing countries influence the internationalization of DMNCs, creating a laboratory for extending theory. I illustrate this idea by reviewing some of the key theories and models of the multinational company and explaining how they can be extended with the study of DMNCs.
  • References (87)
  • Citations (227)
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References87
Newest
Published on Aug 1, 2012in Global Strategy Journal 2.73
Snehal Awate4
Estimated H-index: 4
(TU: Temple University),
Marcus Møller Larsen9
Estimated H-index: 9
(CBS: Copenhagen Business School),
Ram Mudambi42
Estimated H-index: 42
(TU: Temple University)
Emerging economy multinationals (EMNEs) are catching up with advanced economy MNEs (AMNEs) even in emerging, high technology industries, where their knowledge-based disadvantages are most severe. We explain this phenomenon by distinguishing between output and innovation capabilities. Successful EMNEs' focus on output capabilities need not facilitate innovation catch-up. We compare the knowledge bases of an industry-leading AMNE and a fast-follower EMNE using patent data, buttressed by qualitativ...
118 Citations Source Cite
Published on Aug 1, 2012in Global Strategy Journal 2.73
Yadong Luo64
Estimated H-index: 64
(UM: University of Miami),
Stephanie Lu Wang9
Estimated H-index: 9
(UM: University of Miami)
We explore how home country conditions affect outward foreign direct investment (OFDI) strategies (scale, timing, location) employed by developing country multinational corporations (DMNCs). Extending from the springboard and LLL (leverage, linkage, and learning) perspectives, we illustrate that DMNCs rely on their home base during their internalization process in a unique fashion compared with traditional multinationals due to their well-established strengths at home and competitive weaknesses ...
122 Citations Source Cite
Published on Aug 1, 2012in Global Strategy Journal 2.73
Anirvan Pant5
Estimated H-index: 5
(IIMB: Indian Institute of Management Bangalore)
The emergence of developing country multinational companies (DMNCs) provides us an opportunity to redress the neglect of the process of cross-border legitimation. We argue that DMNCs face three challenges to legitimation in developed country markets—liability of foreignness, liabilities of origin, and liability of advantage. By means of a qualitative inquiry into the cultural-cognitive legitimation of Indian software services firms in the United States over the course of two decades, we identify...
47 Citations Source Cite
Published on Aug 1, 2012in Global Strategy Journal 2.73
Jean-François Hennart41
Estimated H-index: 41
Does Dunning's OLI model really explain the pattern of foreign direct investments by emerging market multinationals (EMMs)? I argue that it suffers from the basic flaw of assuming that location advantages (CSAs) are properties of a country and freely available to all firms operating there. But some CSAs have owners, usually local firms, who can sometimes derive significant gains from the monopoly control of these resources. They can use this monopoly power to finance intangible-seeking investmen...
158 Citations Source Cite
Published on Aug 1, 2012in Global Strategy Journal 2.73
Rajneesh Narula37
Estimated H-index: 37
(University of Reading)
Applying extant IB theory, I argue that initial firm internationalisation is shaped by the interdependence and dynamic interaction between its O assets and the L assets of its home location. Regardless of nationality, the initial O assets of an infant MNE tend to be constrained by the L assets available to them, rather than by their strategy. I also contrast the modus operandi of developing country (DC) infant MNEs with those from advanced economies, highlighting the similarities and differences...
128 Citations Source Cite
Published on Aug 1, 2012in Global Strategy Journal 2.73
Luis Alfonso Dau9
Estimated H-index: 9
(NU: Northeastern University)
Building on the institution-based view of strategy, I study the impact of pro-market reforms on developing country firm multinationality. I propose that reforms increase multinationality by reducing institutional imperfections and increasing domestic competition, thus inducing firms to expand internationally. However, I argue the effect is higher for private firms than state firms because the former are compelled to be more responsive to institutional changes and opportunities in order to surviv...
59 Citations Source Cite
Published on May 1, 2012in Journal of International Business Studies 7.72
Arun Kumaraswamy15
Estimated H-index: 15
(TU: Temple University),
Ram Mudambi42
Estimated H-index: 42
(TU: Temple University)
+ 1 AuthorsArindam Tripathy9
Estimated H-index: 9
(UW: University of Washington)
Market liberalization in emerging-market economies and the entry of multinational firms spur significant changes to the industry/institutional environment faced by domestic firms. Prior studies have described how such changes tend to be disruptive to the relatively backward domestic firms, and negatively affect their performance and survival prospects. In this paper, we study how domestic supplier firms may adapt and continue to perform, as market liberalization progresses, through catch-up stra...
177 Citations Source Cite
Published on Feb 1, 2012in Global Strategy Journal 2.73
Ravi Ramamurti17
Estimated H-index: 17
(NU: Northeastern University)
337 Citations Source Cite
Published on Feb 1, 2012in Global Strategy Journal 2.73
Anoop Madhok25
Estimated H-index: 25
(York University),
Mohammad Keyhani5
Estimated H-index: 5
(York University)
We investigate the rapid internationalization of many multinationals from emerging economies through acquisition in advanced economies. We conceptualize these acquisitions as an act and form of entrepreneurship, aimed to overcome the ‘liability of emergingness’ incurred by these firms and to serve as a mechanism for competitive catch-up through opportunity seeking and capability transformation. Our explanation emphasizes unique asymmetries (and not necessarily advantages) of emerging multination...
196 Citations Source Cite
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Published on Jul 16, 2019
Our grasp of reputation as a strategic asset would benefit from a better understanding of how country-level factors influence reputation development, as well as how reputation obtained in one context can be transferred to another. This volume of Research in Global Strategic Management focuses on global aspects of reputation in strategic management.
Published on Jan 1, 2019in Asia Pacific Journal of Management 2.74
Liang Chen3
Estimated H-index: 3
,
Yi Li4
Estimated H-index: 4
(USYD: University of Sydney),
Di Fan10
Estimated H-index: 10
(UWA: University of Western Australia)
Published on Apr 16, 2019in Management International Review 2.69
Ru-Shiun Liou2
Estimated H-index: 2
(UT: University of Tampa),
Ru-Shiun Liou2
Estimated H-index: 2
(UT: University of Tampa),
Rekha Rao-Nicholson8
Estimated H-index: 8
(Newcastle University)
The primary studies on emerging market multinational firms (EMFs) thus far have depicted a picture of accelerated internationalization in which EMFs conduct a series of aggressive cross-border acquisitions to further enhance their competitive advantage. However, it is not clear whether the EMFs which conducted the acquisitions at a young age experience better performance. EMFs constrained by their home market development in economic institutions may encounter different challenges in their cross-...
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Published on May 16, 2019in Journal of Business Ethics 3.80
Eduardo Duque-Grisales , Javier Aguilera-Caracuel8
Estimated H-index: 8
(UGR: University of Granada)
This paper examines whether a firm’s financial performance (FP) is associated with superior environmental, social and governance (ESG) scores in emerging markets of multinationals in Latin America. The study addresses the current research gap on this issue; it develops hypotheses and tests them by applying linear regressions with a data panel drawn from the Thomson Reuters Eikon™ database to analyse data on 104 multinationals from Brazil, Chile, Colombia, Mexico and Peru between 2011 and 2015. T...
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Published on May 13, 2019in Management Decision 1.96
Laura Rienda12
Estimated H-index: 12
(University of Alicante),
Enrique Claver-Cortés37
Estimated H-index: 37
(University of Alicante)
+ 1 AuthorsRosario Andreu Guerrero6
Estimated H-index: 6
(University of Alicante)
Purpose In recent years, emerging-market multinationals (EMMs) are receiving significant attention in the international business literature. They represent a challenge for the conventional wisdom, mainly derived from the behavior of developed-country multinationals (MNEs). The purpose of this paper is to analyze how different cross-national distances, namely cultural, administrative, geographic and economic, may affect establishment mode choice by Indian MNEs. Design/methodology/approach Data ar...
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Published on May 1, 2019in Global Strategy Journal 2.73
Olivier Bertrand16
Estimated H-index: 16
,
Marie-Ann Betschinger3
Estimated H-index: 3
(HEC Montréal),
Tomi Laamanen14
Estimated H-index: 14
(HSG: University of St. Gallen)
This article contributes to an improved understanding of the effects of subnational regional corruption on the external growth strategies of emerging economy firms. We examine the acquisition activity of firms in their home regions, in other parts of the country, and internationally. We consider four mechanisms through which a corrupt regional home context can affect firms’ acquisition behaviors: (a) corrosive deal deterrence, (b) deal facilitation, (c) corruption escape into less corrupt contex...
1 Citations Source Cite
Published on Apr 12, 2019in The Multinational Business Review
Nic Robertson (UCT: University of Cape Town), John Luiz18
Estimated H-index: 18
(UCT: University of Cape Town)
Purpose This paper aims to explore the delayed, then accelerated, internationalisation of an emerging multinational enterprise (EMNE), with a particular focus on the media technology sector, and how it exploited complementarities between emerging markets. Design/methodology/approach The research is qualitative in nature and focuses on the expansion of a South African media technology EMNE case study that has a footprint in over 130 countries and has one of the largest market capitalisations of a...
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