Introduction

The main objective of this book is to provide both initiated and non-expert readers with a fresh outlook on the strategic implications of doing business in developing markets from both foreign multinational enterprises’ (MNEs) and local firms’ perspectives. Accordingly, all the chapters of this volume explore, in their own way, the local-global dynamics underlying interactions between the economic and social logics that prevail in developed and developing countries. While interest in developing markets is not a new phenomenon in academia and the business world, it has gained prominence as a result of the recent surge in the economic power of emerging countries on the global stage. Their markets not only represent an instrumental source of growth for globalizing firms, but also are home to increasingly innovative and competitive firms that succeed both at home and globally. The global economic and political orders in which emerging countries play a more prominent role bring new challenges as well as opportunities to light. Accordingly, the intent of this volume is to help unravel the intricacies underlying the tensions between the dominant economic and social logics that prevail in developed and developing markets. Understanding such local-global dynamics helps shed light on the contextual conditions that foster or hinder the global competitiveness of MNEs, especially with respect to developing countries. This volume represents a collection of individual and joint works by authors who have been collaborating within a collegial and supportive research group for several years. We hope our readers will feel some deep connections and synergies as they read through them. The volume is structured into four parts and can be used either as a reference book for initiated readers, since the chapters are independent and self-contained, or as a progressive read, especially for nonexpert readers, because the order in which these chapters are arranged allows for an incremental understanding of the phenomena. The first part of the book sets the stage for the whole volume by clarifying some fundamental theoretical concepts such as local-global dynamics as well as by offering complementary theoretical perspectives to the analysis of such dynamics. On the one hand, Chapter 1, by Soussi, contrasts the instrumental rationality of MNEs from developed countries and the institutional rationality and local traditions that prevail in emerging countries. By deconstructing the

tension underlying the two dominant logics, this chapter starts to unpack the “local-global dynamics” black box in which this book is interested. On the other hand, Marcotte et al. in Chapter 2 take a deeper look at these tensions and propose implementation strategies that MNEs from industrialized countries may adopt while dealing with developing markets. Essentially, both chapters conceptualize local-global dynamics as resulting from the tension between the differential dominant logics of developed and developing markets at the economic and institutional levels. In Part II the authors explore more specifically the implications of local-global dynamics for MNEs from developed economies from particular managerial perspectives. Specifically, Lirio’s chapter (Chapter 3) adopts a cultural perspective on the discussion of the key challenges expatriate managers face with reference to the motivation of local workers, as they may each operate within different cultural frameworks. The proposed model of contextualized goal setting has concrete managerial implications for global managers. Conversely, Edwards (in Chapter 4) adopts an institutional change perspective and suggests that the dominant institutional logics of MNEs evolve over time, depending on the degree of parent-subsidiary interdependence, on the one hand, and on institutional distance between home and host countries, on the other hand. Both local and global tensions have major implications for MNEs of developed economies operating in developing markets. From an equally impactful perspective, Totskaya in Chapter 6 explores the governance mechanisms that prevail in developing economies. Specifically, she argues that business groups and their operating modes are so entrenched in developing economies that MNEs must be prepared to play by the local rules in order to ensure their survival and performance. Finally, Ul-Haq and Farashahi (in Chapter 5) suggest that in addition to adjusting their operating institutional logics and internalizing local rules, foreign MNEs might also benefit by developing proactive strategies so as to mitigate the particular political risks that are inherent in developing markets. Thus, their chapter focuses essentially on the contextual factors that shape these political strategies. Part III includes more fine-grained empirical studies, with the objective not only of illustrating the theories presented earlier but also of proposing new theories based on actual situations in which local-global dynamics played a critical role. In this regard, Bosquetti et al. in Chapter 8 propose an interesting comparative case study that looks at the strategic approaches of two foreign MNEs to the acquisition of local Brazilian firms. It substantiates nicely how the tension between the predominantly economic logic of foreign MNCs and the rather traditional logic of developing countries may explain the success or failure of cross-border mergers and acquisitions. Similarity, Naguib’s chapter (Chapter 9) illustrates how local subsidiaries of foreign MNEs deal with the conflicting requirements of, on the one hand, their parents and, on the other, local institutions in developing countries. The case studies show how “smart partnerships” between these subsidiaries and local governments help achieve win-win objectives. Exploring another cross-border phenomenon, Marcotte (in Chapter 7)

underlines the particular importance and challenge that knowledge transfer represents in terms of interactions between foreign MNEs and developing countries. While institutional differences between home and host countries may hinder the ability of all MNEs to transfer knowledge effectively, small firms are suggested to be more effective in transferring knowledge, thanks essentially to their nimbleness and entrepreneurial capabilities. Finally, Hafsi and Gauthier (in Chapter 10) provide a compelling integrative view of the local-global challenges from both institutional and competitive environments standpoints as they investigate how multiple factors of different levels of analysis – namely, the environment, strategy and leadership characteristics – influence collectively the performance of foreign MNEs in a developing country. In the fourth and final part of the book, emphasis is put on the emergent global role of firms from developing economies, both local subsidiaries of foreign MNEs and home-grown MNEs. On the one hand, Chapter 11, by Raţiu and Molz, is essentially concerned with the entrepreneurial behavior of local subsidiaries and how they influence corporate environmental strategies of their parents. On the other hand, Taleb’s chapter (Chapter 12) completes the flow of thinking in this volume by focusing on MNEs from emerging markets. His key argument is that developing markets present their home-grown firms with a unique opportunity to learn how to operate in a variety of institutional settings. They may do so by developing an eclectic repertoire of strategies that can serve not only in other developing markets but also in developed and least-developed countries. Figure I.1 presents a road map to help navigate the four parts of this book. As shown, the chief objective is to provide the reader with a coherent and complementary set of views on local-global dynamics from an MNE perspective. This overarching theme ensures the overall coherence among the constituting chapters as they all explore, in their own way, the uneasy interaction between the dominant logics in developing and developed economies as well as their implications for MNEs operating in developing and emerging markets. In addition, the arguments developed in the different chapters offer complementary

views on the nature of phenomena investigated, research methodologies used, and geographic coverage – which ranges from South Africa and Cameroon (Africa) to China, the Philippines and Malaysia (Asia) to Brazil (South America), France and Portugal (Europe), in addition to phenomena that are more global in nature. This widespread geographic coverage is consistent with our desire to infuse theory with the richness of a multitude of perspectives from all over the world.