ABSTRACT
Introduction This chapter is rather exploratory in nature and focuses on emerging multinationals from developing markets. The ultimate objective is to foster a growing debate on the characteristics and possible uniqueness of such firms. Accordingly, the reader is presented with some thought provoking ideas on potential sources of their comparative advantages. In recent years, scholars and practitioners alike have shown mounting interest in the behavior and performance of MNEs from emerging markets (EMMNEs). These are defined as multinationals that were initially created as local firms to serve their home markets in emerging countries and then became international players. Developing markets along with transitional markets – that is, former socialist countries – constitute what are generally referred to as emerging markets. These are defined as “low-income, rapid growth countries using economic liberalization as their primary engine of growth” (Hoskisson et al., 2000: 249). This trend is essentially driven by the growing conviction that emerging markets are redrawing the picture of international trade (Inkpen and Ramaswamy, 2007) as their home-grown EM-MNEs outperform their competitors from more economically developed economies (DM-MNEs), both at home (Bhattacharya and Michael, 2008) and abroad (Cuervo-Cazurra and Genc, 2008). In fact, a quick look at the recent evolution of the Global Fortune 500 or Financial Times 500 lists of the most powerful global companies suffices to make clear that EM-MNEs are steadily gaining a strong and unprecedented foothold in the global economy. The central inquiry of this chapter is to discuss whether the recent success of an increasing number of EM-MNEs is sustainable over time and whether it is scalable to a larger population of comparable firms. While some scholars suggest that EM-MNEs may not represent a homogeneous population (Ramamurti, 2009), we contend that they do share comparable experiences, as they developed in institutional environments that exhibit a number of similarities, from poor physical infrastructure and regulatory apparatus (Khanna and Palepu, 2006) to unpredictable “moods” of government
officials (Wells, 1983) to highly informal institutions (Jütting et al., 2007). Accordingly, the understanding of EM-MNEs’ behavior lies, at least partially, in the characteristics of their institutional environments (Peng et al., 2008), which may clarify why they seem to act differently from DM-MNEs, since they “respond to the threats and opportunities arising from globalization with their own distinctive competitive advantages” (UNCTAD, 2006: xxv). Given the nature of the phenomenon at hand, the explicit separation of institutional effects from other influences may be fruitful (Dunning and Lundan, 2008b), especially because institutional diversity calls for both strategic adaptability and managerial versatility. In the subsequent sections of this chapter we first discuss the distinctive nature of EM-MNEs in relation to the advantages and disadvantages that are generally associated with their context in developing markets. Subsequently, we propose an analytical framework that contrasts four ideal-types of institutional environments so as to identify the specific features of emerging markets that shape the behavior of locally grown firms. Then we use this typology to discuss the possible implications and opportunities for EM-MNEs as they leverage their contextual learning experience and exposure to multiple institutional logics.
