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F02.11C: Internationalization Strategies of Emerging Market Firms
Time:
Friday, 13/Dec/2024:
10:45am - 12:00pm
Session Chair: Michael Mueller, Copenhagen Business School
Location:Otakaari 1, U119 DELOITTE
50 people
Competitive Paper Session
Presentations
An Alternative R&D Internationalization Strategy for Firms from Emerging Countries with Restrictive OFDI Environments: Contrasting the Evolutionary Journey with AMNEs
F. Anwar, B. B. Nujen, H. Solli-Sæther
Department of International Business, Norwegian University of Science and Technology, Ålesund, Norway
Internationalizing research and development (R&D) activities allows firms to access diverse knowledge and expertise, enhancing their innovative capacities. While advanced economy multinational enterprises (AMNEs) have historically led in R&D foreign direct investments, emerging-country multinational enterprises (EMNEs) are increasingly engaging in this trend despite facing challenges such as regulatory restrictions and a lack of firm-specific advantages. By investigating the evolutionary journey of EMNEs, particularly from restrictive outward foreign direct investments (OFDI) environments, this exploratory case study seeks to understand how these firms navigate and succeed in the global R&D landscape compared to their advanced counterparts. A process-tracing approach explores the evolution of the R&D internationalization trajectory of both firms. Our case company from an emerging country with a restrictive regulatory environment uses resource augmentation through collaborative partnerships to engage in R&D internationalization and innovate despite financial restrictions. Conversely, a company from a supportive advanced economy benefits from direct investment from its home country and follows a traditional R&D internationalization strategy. These strategies highlight the importance of contextual factors in shaping firms' paths to enhance their competitive edge and innovative capacities, particularly for emerging country firms overcoming regulatory challenges to catch up with AMNEs.
Overseas Subsidiaries of Business Group Affiliates: The Influence of Group-level Diversification
A. Purkayastha1, A. Delios2, V. Kumar1
1The University of Sydney Business School, Australia; 2NUS Business School, Singapore
How does a business group’s level of diversification influence the international growth of its affiliated firms? This question extends beyond the corporate diversification literature given the unique features of business groups (BGs), and at the same time it engenders questions about whether BGs possess resources that can be transferred across its affiliated entities to facilitate their growth. We argue that certain specific resources within a BG that emerge from group level diversification can facilitate the overseas equity-based expansions by its affiliates. We introduce two group-level contingent resources: (1) foreign market knowledge and (2) foreign technology knowledge. We test our posited relationships using data on the international subsidiary establishments of 3,204 Indian BG affiliated firms in the 2006–2014 period.
Challenges of Internationalization for SME’s in Developing Countries
B. Munoz1, R. Garcia Cruz2, J. García de Madariaga3
1University Complutense of Madrid, Spain; 2Sevilla University Spain; 3Universidad Complutense de Madrid
This work aims to explore the theoretical foundations supporting scientific progress regarding the challenges faced by SMEs in emerging markets during their internationalization process, particularly in the context of a digitized global economy. The central focus of this research is to thoroughly analyze the dynamic capabilities of the international entrepreneur, considering them as a crucial to optimize the utilization of resources, focus on international returns. The intensive use of the Internet and new information has introduced new business models and innovative forms of business management.
To identify the most relevant topics for research, bibliometric analysis and metanalysis are conducted on major scientific databases. This allows identifying the main topics, as well as the most relevant theories and schools studying the addressed issues. The empirical research focuses on Peruvian companies with the participation of 156 interviewees.
The results emphasize the role of the dynamic capabilities of managers in the impact on international performance. Conclusions from pilot survey and interviews highlight the urgent need for managers to acquire soft skills and specific knowledge in international trade and business. The importance of training in specific phases of the internationalization process, and how dynamic capabilities become a positive key factor for international business success
Digital Technologies and Internationalization of Emerging Markets Firms: The Role of Mobile Money as a Mediator of Institutional Voids in Sub-Saharan African Countries
F. De Beule1, S. Elia2
1University of Leuven, Belgium; 2Politecnico di Milano, Italy
This paper explores the relationship between institutional quality and the internationalization of emerging market firms (EMFs), focusing on the role of digital technologies, particularly mobile money, in Sub-Saharan Africa. Two divergent perspectives exist: one that argues stronger institutions facilitate internationalization, and another that contends institutional voids drive EMFs to international markets to escape domestic challenges. By analyzing a dataset from the World Bank Enterprise Survey covering 5,346 firms across 16 Sub-Saharan African countries from 2012 to 2020, we propose and find that institutional voids are positively associated with the adoption of mobile money. Moreover, mobile money significantly enhances the internationalization of these firms by reducing export costs, improving access to financial services, and facilitating cross-border trade. Our findings suggest that digital technologies mediate the relationship between institutional voids and internationalization, providing a potential resolution to the "institutions-internationalization conundrum." This study contributes to the international business and emerging markets literatures by highlighting the critical role of digital solutions in enabling EMFs to overcome institutional challenges and successfully enter foreign markets.