ABSTRACT
A significant aspect of the changes in the global economy in the last two decades is the economic liberalization of protected markets and the further liberalization of market economies. Institutional changes emanating from evolving political landscapes within individual countries and pressures from supra-national bodies such as the World Trade Organization (WTO), International Monetary Fund (IMF), and the World Bank have been instrumental in the liberalization of developing countries’ economies and their integration into the global economy. As part of these reforms, a number of developing countries implemented policies aimed at encouraging competition in the domestic marketplace, urging domestic firms to build international levels of competitiveness, and allowing multinational enterprises (MNEs) to enter their erstwhile protected markets. Increasing integration in the global economy has meant changed competitive landscapes for organizations from developing countries as well as multinationals operating in these economies, thus necessitating organizational transformations to deal with new competitive dynamics. For instance, indigenous firms from developing economies now have to compete without the protectionist umbrella prevalent during the earlier periods. In the context of these institutional reforms, a critical question faced by local firms in developing countries is how to respond to the challenges presented by a radically changed competitive environment. The nature of local firms’ strategic responses in this changed environment has strong implications for the perceived success or failure of economic reforms undertaken by developing country governments (Aulakh, 2007; Meyer, 2004; Ramamurti, 2004).
