ABSTRACT

Economic liberalization in emerging economies over the last two and a half decades (Sachs and Warner, 1995) has provided increased technological and learning opportunities for Emerging Market Firms (EMFs), leveraging options for offering new products and imitating capabilities of developed country firms (Zahra et al., 2006). Trade and market liberalization fuels dynamism in emerging economies. As market environments become more dynamic, firm capabilities also require corresponding changes (Hoskisson et al., 2000). Thus a key question pertaining to this adaptation to environmental changes is: How do firms manage the creation of new, and reconfiguration of existing capabilities necessitated by changing environments?