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Internationalisation strategies of emerging market firms: evidence from Sarawak, Malaysia
Abstract
Purpose
This study aims to explore the internationalisation paths and strategies adopted by firms from an emerging market and serves as a step towards examining the suitability of prevailing internationalisation theories in the context of emerging market firms.
Design/methodology/approach
This study adopted a qualitative methodology and gathered data through in-depth semi-structured interviews with 15 top managers of internationalised firms from the East Malaysian state of Sarawak. Data were analysed thematically.
Findings
The results revealed that the internationalisation strategies of firms from Sarawak can be classified under three main categories: motivations and markets, modes and measures. The constraints the firms faced were important determinants of their internationalisation strategies. The internationalisation paths and strategies of the firms were also found to exhibit both similarities to and deviations from the tenets of prevailing internationalisation theories.
Originality/value
The study contributes knowledge to the literature of both internationalisation theories and internationalisation strategies of emerging markets, in particular, it advances Fey et al.’s (2016) Five M Framework.
... The Uppsala model of internationalisation suggests that, firms internationalise through a gradual and incremental step-by-step process (Johanson and Vahlne, 2009). Here, a domestic firm gradually develops an interest in overseas expansion and initiates this through irregular exports to foreign markets; this would be followed by the next step where the same firm would engage in more regular exporting activities through an international division (Amoah et al., 2022;Johanson and Vahlne, 2009). Moreover, the third step of internationalisation would be when the focal firm (the firm in consideration) would formalise an agreement with agents in a foreign market, the fourth step would be the establishment of its own sales organisation in the foreign market, and eventually, the fifth stage would be the focal firm establishing its production facility in the foreign market; eventually, it would further expand into other foreign markets in the same manner (Johanson and Vahlne, 2009). ...
Purpose-The purpose of this paper is to discuss the notion of the Liability of Outsidership (LoO) in multinational enterprises' (MNEs) operations, following Johanson and Vahlne's (2009) revision of the Uppsala model. This study seeks to identify the sources of outsidership and the strategies used by MNEs to overcome these liabilities, providing a comprehensive overview for practitioners, academics and policymakers. Design/methodology/approach-This paper studies firm-level operations and investigations of foreign direct investment by MNEs. By synthesising existing research and theoretical frameworks, this study identifies key dimensions and determinants of LoO and offers insights into its implications for international business strategy. This paper's approach ensures a holistic understanding of the concept, drawing from diverse sources to present a well-rounded perspective. Findings-This study reveals two broad themes in the literature: firm-specific factors, such as market entry decisions, managerial attributes and business nature, and country-specific factors, including economic, social and political conditions. The authors highlight critical insights into these factors and identify successful strategies that MNEs use to become embedded in local networks. Research limitations/implications-The insights from this study will aid academics and researchers in gaining a comprehensive understanding of the LoO and identifying future research directions. Additionally, this study will assist MNE leaders and managers in understanding the key dynamics of foreign markets and the critical factors to consider in their internationalisation strategies. Originality/value-This study discusses LoO in MNEs by offering a holistic overview to identify the sources of outsidership and the strategies used by MNEs to overcome these liabilities. This paper highlights key gaps and areas for future research and proposes practical strategies that MNEs can adopt to overcome outsidership, thereby serving as a valuable resource for both practitioners and policymakers.
... Malaysia is classified as an "emerging" economy by most analystsfrom the IMF to the Dow Jones index ranking 21st in Nominal GDP with an expected incremental GDP on the rise (Amoah, Tiew, and Yap 2022). The perceived importance of entrepreneurship to the growth of Malaysia's economy is evidenced by the sheer amount of supporting mechanisms and policies that exist for entrepreneurs, including funding, physical infrastructure, and business advisory services (United Nations Development Programme 2020). ...
Irrespective of support or opportunities, evidence suggests that most higher education business students in emerging markets are still primarily guided reactively (out of personal need or temporarily) into for-profit entrepreneurship rather than through personal incentive raising doubts on the impact of University entrepreneurial push strategies and programmes. We address the lack of meso level quantitative studies and propose a new student-related context sensitive conceptual model for student entrepreneurial intention in emerging markets exploring the extent to which a context-based and feasibility-oriented conceptual model is required. We propose the components Risk and Innovation, Autonomy, National norms and number of languages spoken all affect entrepreneurial intention. Furthermore, we suggest that education has a moderating effect overall and more so on the risk and innovation component. Our theoretical framework was partially supported as we show compelling evidence that risk and innovation, autonomy, and languages spoken have a significant effect on student entrepreneurial intention. The results indicate that conceptual frameworks differ by context and entrepreneurship education in emerging markets is contingent on specific human capital of students but can be stimulated through improving cognitive institutional structures and curricula focusing on context and attitudes towards risk taking.
... In a competitive global market landscape, exporters must contend with both domestic and international rivals already established in the target markets (Amoah et al., 2022). Success in these environments requires understanding customer preferences, adapting products to local tastes, and offering value-added services (Mayer, 2021). ...
This study examines the obstacles encountered by non-Anglophone business owners when exporting to Anglophone countries, thus contributing to the body of knowledge regarding international trade barriers. It employs a qualitative methodology, adopting an interpretive paradigm to explore the multifaceted nature of human behavior and experiences within this context. The data collection methods encompassed semi-structured interviews, participant observations, and thematic analysis of concrete case studies derived from authentic experiences. This study investigated a range of challenges, including linguistic barriers, cross-cultural variations, marketing adaptation strategies, divergent customer expectations, and regulatory compliance issues. This approach elucidates the impediments faced by non-Anglophone business proprietors and delineates their strategies for overcoming these obstacles. The findings identify the key factors influencing export success and provide empirically grounded recommendations for non-Anglophone business owners seeking to enhance their export capabilities in the Anglophone markets. This study contributes to the literature on international entrepreneurship and cross-cultural business practices and offers insights that may inform international trade practitioners and policymakers.
... eographically, and the different currency value (Hierofani, 2021;Darmastuti, et. al., 2022, January;Reza, et. 16 Falah: Jurnal Ekonomi Syariah Vol. 8 No. 1 (2023) ISSN (print): 2502-3918 | ISSN (online): 2502-7824 al., 2022. They work in many occupations sector, some of them become expert and others become operational personnel (Tirtosudarmo, 2022;Amoah, et. al., 2022). Moreover, many Indonesians founded the various businesses in Malaysia, such as education, restaurant, travel agent, and other services. Meanwhile, Indonesian migrant workers face difficulties after returning back to their home country. This is contrary condition considering their contribution to their home country during working aboard ...
Malaysia is the main destination for Indonesian migrant employees to work aboard. This research aims to investigate the factors influenced financial literacy of Indonesian Migrant Employee in Malaysia. Ordered Logistic Regression is employed in this research in order to conduct a survey among 303 Indonesian Migrant Workers. OLS model employed to test the effect of financial attitude, financial behavior, financial knowledge, financial socialization, and demographic variables on the financial literacy. The result found that financial attitude, financial behavior and financial socialization have positive and statistically affects on the financial literacy. Meanwhile, in term of age, participants at 36-50 years old have positively and statistically affects on the financial literacy, while senior and diploma students have a higher financial literacy in terms the level of education. In addition, Gender also have positively and statistically effects on financial literacy. This study contributes to increase the discourse of financial literacy especially in financial knowledge that needs to be improved by government for Indonesian employee.
... International business (IB) prior to the twenty-first century focused on the study of multinational corporations headquartered in developed Western economies [14]. ...
This research focuses on integrating digital platforms in small and medium-sized
enterprises (SMEs), emphasizing the importance of efficient stakeholder communication for their success. Additional scholarly investigation is required to examine the correlation between SME success and social media adoption, with a focus on emerging countries. This study examines how technology-organizational-environmental (TOE) factors affect digital social communication and SME success in developing nations. Through employing the TOE framework, this study attempts to explain the determinants of social media adoption and its subsequent effect on the performance of SMEs. Data will be gathered through the utilization of a well-organized questionnaire disseminated online to a randomly selected group of participants from SMEs in Indonesia. Partial-least squares-structural-equation-modeling will be employed to conduct the route analysis, with the involvement of SME owners, executives, and managers. Furthermore, the study will evaluate how social media influences the connection between TOE qualities and SME performance. The findings will demonstrate a clear and favorable correlation
between the TOE components, and the interaction between SME performance and
social media adoption. This research will enhance the existing body of knowledge in
this domain by offering valuable insights for professionals and scholars interested in
the use of social media in SMEs.
Purpose
The purpose of this paper is to discuss the notion of the Liability of Outsidership (LoO) in multinational enterprises’ (MNEs) operations, following Johanson and Vahlne's (2009) revision of the Uppsala model. This study seeks to identify the sources of outsidership and the strategies used by MNEs to overcome these liabilities, providing a comprehensive overview for practitioners, academics and policymakers.
Design/methodology/approach
This paper studies firm-level operations and investigations of foreign direct investment by MNEs. By synthesising existing research and theoretical frameworks, this study identifies key dimensions and determinants of LoO and offers insights into its implications for international business strategy. This paper’s approach ensures a holistic understanding of the concept, drawing from diverse sources to present a well-rounded perspective.
Findings
This study reveals two broad themes in the literature: firm-specific factors, such as market entry decisions, managerial attributes and business nature, and country-specific factors, including economic, social and political conditions. The authors highlight critical insights into these factors and identify successful strategies that MNEs use to become embedded in local networks.
Research limitations/implications
The insights from this study will aid academics and researchers in gaining a comprehensive understanding of the LoO and identifying future research directions. Additionally, this study will assist MNE leaders and managers in understanding the key dynamics of foreign markets and the critical factors to consider in their internationalisation strategies.
Originality/value
This study discusses LoO in MNEs by offering a holistic overview to identify the sources of outsidership and the strategies used by MNEs to overcome these liabilities. This paper highlights key gaps and areas for future research and proposes practical strategies that MNEs can adopt to overcome outsidership, thereby serving as a valuable resource for both practitioners and policymakers.
Background This analysis compares SME digitalization research in Malaysia and Poland, providing a comprehensive comparative overview of research trends and contributions in both countries. The study emphasizes how digital technologies drive innovation and improve organizational performance, urging SMEs to seize strategic opportunities for sustainable growth through digitalization. Methods A bibliometric analysis was employed by leveraging the open-source Lens.org database yielding 162 entries for Malaysia and 42 for Poland, employing specific terminologies associated with digitalization and SMEs. The analysis was enhanced through the utilization of VOSviewer, a software tool available at VOSviewer.com, alongside Lens.org. Both tools facilitated an in-depth exploration of the selected studies. Result Results indicate a marked difference in publication volumes between Malaysia and Poland, suggesting underlying factors contributing to these disparities. Malaysia's leading position in publishing can be attributed to its expansive and diverse research community, potentially indicating increased research funding facilitating a greater volume of studies. Additionally, Malaysia's extensive research interests highlight a robust academic and scientific environment across various fields of study. Conclusions These findings furnish valuable insights for policymakers, researchers, and industry practitioners in designing strategies and initiatives to fortify SMEs in their digitalization campaigns, with a keen awareness of the regional variations. Understanding these investigation patterns is of crucial importance for fostering sustained growth and innovation in SMEs and facilitating cross-border knowledge exchange and collaboration.
Firm internationalisation, a key driver of global economic growth, is influenced by various entrepreneurial resources. This study explores the relationships between human capital, risk capital, risk acceptance, opportunity perception, and firm internationalisation using cross-national data from the Global Entrepreneurship Development Index (GEDI). Employing fuzzy set qualitative comparative analysis (fsQCA), this study analyzes data from 137 countries. The findings highlight two primary configurations driving internationalisation: (1) risk acceptance and opportunity perception, and (2) risk capital and opportunity perception. Opportunity perception emerges as a critical factor in both configurations, while human capital is not found to be a necessary condition. These results contribute to a better understanding of the factors that foster firm internationalisation and inform policies aimed at promoting global entrepreneurial ecosystems.
Purpose
This study aims to examine the impact of home–host country distance on the cross-border mergers and acquisitions performance.
Design/methodology/approach
The results of this study are based on a final sample of 483 completed cross-border deals involving BRICS nation acquirers and targets spread across a set of 27 nations. While controlling for prior experience, among other factors, the impact of nine institutional distance dimensions on deal performance is examined. Cumulative abnormal returns calculated over the select event windows are used as a measure of deal performance.
Findings
The results of this study validate the explanatory power of cross-country distance and exhibit that financial and cultural distance exert a negative influence on deal performance, whereas political and global connectedness distance positively impacts performance. Interestingly, geographic distance is not found to be related to performance outcomes.
Research limitations/implications
The results of this study caution against possible aggregation of the cross-country distance measure and point towards the need to acknowledge and analyse the multi-dimensional nature of distance.
Practical implications
The results of this study are expected to aid managers in devising internationalisation strategies and target selection, maximising their performance and shareholder wealth.
Originality/value
This study contributes to the knowledge of internationalisation and cross-country distance. It presents as one of the first to investigate the impact of institutional distance on deal performance using a substantially large multi-country emerging market data set.
We argue and explain how the study of emerging market multinational companies can help enrich our understanding of the internationalization process. Firms' internationalization process is a central and enduring theme in international business. However, most of the theoretical models are built on the analysis of advanced economy multinationals. Emerging market multinationals differ crucially in the role that the home country plays in their behavior, resulting in different patterns of internationalization. We propose that the discussion of the applicability of extant theory can be advanced by differentiating internationalization theories according to three different ontological perspectives: resource oriented, transaction oriented, and process oriented. We further suggest that the study of emerging market multinationals' internationalization processes reveals three contextual accelerators: government, catch-up, and global value chains. These accelerators help adapt internationalization process models to new contextual realities.
Coding is a process used in the analysis of qualitative research, which takes time and creativity. Three steps will help facilitate this process:
1. Reading through the data and creating a storyline;
2. Categorizing the data into codes; and
3. Using memos for clarification and interpretation.
Remembering the research question or storyline, while coding will help keep the qualitative researcher focused on relevant codes. A data dictionary can be used to define the meaning of the codes and keep the process transparent. Coding is done using either predetermined (a priori) or emergent codes, and most often, a combination of the two. By using memos to help clarify how the researcher is constructing the codes and his/her interpretations, the analysis will be easier to write in the end and have more consistency. This paper describes the process of coding and writing memos in the analysis of qualitative data related to diabetes research.
Purpose: The purpose of this paper is to unveil negative outcomes associated with an absence of guanxi in a buyer-supplier relationship in Chinse logistics industry.
Design/methodology/approach: This study employs a case study methodology using 16 semi-structured interviews with managers engaged in the process of buying and selling logistics services in China.
Findings: Based on the qualitative interviews, managers experience lack of trust, lack of communication flow and reduced business volume when guanxi is absent in a buyer-supplier relationship in the Chinese logistics industry.
Research limitations/implications: This study has some limitations. First, the results of this study are not generalizable to a broader population. Second, this study explores behavioural patterns with respect to Chinese business culture only.
Practical implications: Firms can use the findings from this study to understand the consequence they can face when guanxi is absent in a buyer-supplier relationship.
Originality/value: This study attempts to offer a balanced perspective on the role of guanxi in a buyer-supplier relationship, particularly in the Chinese logistics industry, by considering how an absence of guanxi generates negative outcomes for firms.
Religious observance remains widespread and thus potentially influential in managerial decision-making, yet its impact on market entry decisions is largely unexplored. This study investigates the effect of managerial religiosity on the three key entry decisions of where, when, and how to internationalise. Based on the verbal protocols of fourteen Malaysian Muslim executives who are considering international expansion, we find that higher levels of religiosity neither led to preferences for other Muslim-majority markets nor significantly influenced ‘when’ and ‘how’ decisions. Nevertheless, our findings demonstrate that religious factors matter in quite different and unexpected ways. In particular, the presence of co-religious minority groups in an otherwise ‘religiously-distant’ market can influence entry decisions among religiously observant managers. Our study therefore yields a new and important insight into entry decisions, namely the role played by managerial religiosity.
Purpose
The purpose of this paper is to examine the impact of entrepreneurial orientation and networking capabilities of born global firms in an emerging market on marketing strategy and foreign market performance.
Design/methodology/approach
Structural equation modeling was used to analyze data from 1,001 internationalized firms in an emerging market and to test seven hypotheses regarding the development of marketing strategy and foreign market performance.
Findings
Marketing strategy was found to mediate the relationship between entrepreneurial orientation and networking capability and foreign market performance, while foreign market performance is affected by entrepreneurial orientation and marketing strategy.
Research limitations/implications
Research on emerging market multinationals can be merged with that of born globals to augment our understanding of how early internationalizers from emerging markets perform in foreign markets.
Originality/value
This study is among the few focusing on born globals in emerging markets, which face the difficulties of newness and limited resources, as well as characteristics of emerging markets, such as institutional voids.
Purpose
This study explores the entrepreneurial marketing (EM) behaviour of Swedish born globals entering the Chinese market through their international networks. Drawing from network theory of small firm internationalisation, this study is positioned in the domain of EM and thus captures the relevance of EM behaviour to explain how born globals internationalise through their networks.
Design/methodology/approach
A qualitative case study approach of two Swedish born global companies active in the Chinese market is employed. Network theory helps analyse the data in the three phases of firm internationalisation processes.
Findings
The study shows the importance of networks for the enactment of EM for born globals. The study traces the evolution of network development in the market entry process of born globals and highlights the importance of aligning network leverage with contextual factors for market performance.
Research limitations/implications
The generalization of the findings is limited due to the exploratory nature of the study and the size of the research sample.
Practical implications
Management of different types of networks is essential in the entry process and further growth of born globals in the Chinese market. In addition, born globals operating in psychically distant and complex institutionally contexts can especially gain support from intermediary networks.such as China.
Originality/value
This study extends knowledge of international entrepreneurship by demonstrating that born global managers can enact EM behaviour by leveraging networks to gain rapid entry into the Chinese market. It further highlights the role of firms’ networks in the EM activities in their internationalisation. The conceptual underpinnings of EM and network theory provide greater understanding of how born globals enter and grow their psychically distant markets.
As qualitative research becomes increasingly recognized and valued, it is imperative that it is conducted in a rigorous and methodical manner to yield meaningful and useful results. To be accepted as trustworthy, qualitative researchers must demonstrate that data analysis has been conducted in a precise, consistent, and exhaustive manner through recording, systematizing , and disclosing the methods of analysis with enough detail to enable the reader to determine whether the process is credible. Although there are numerous examples of how to conduct qualitative research, few sophisticated tools are available to researchers for conducting a rigorous and relevant thematic analysis. The purpose of this article is to guide researchers using thematic analysis as a research method. We offer personal insights and practical examples, while exploring issues of rigor and trustworthiness. The process of conducting a thematic analysis is illustrated through the presentation of an auditable decision trail, guiding interpreting and representing textual data. We detail our step-by-step approach to exploring the effectiveness of strategic clinical networks in Alberta, Canada, in our mixed methods case study. This article contributes a purposeful approach to thematic analysis in order to systematize and increase the traceability and verification of the analysis.
This paper presents the most comprehensive review and meta-analysis of the literature on cultural distance and firm internationalization to date. We analyze the effects of cultural distance on key strategic decisions throughout the entire process of internationalization. For the preinvestment stage, we examine the decisions on where to invest (location choice), how much to invest (degree of ownership), and how to organize the foreign expansion (entry and establishment mode). For the postinvestment stage, we examine the decisions of how to integrate the foreign subsidiary into the organization (transfer of practices) as well as the performance effects of cultural distance at both the subsidiary and the firm level. We find that firms are less likely to expand to culturally distant locations but if they do, they prefer greenfield investments and integrate subsidiaries more through transfer of management practices. Cultural distance does not seem to affect how much capital firms invest and whether they enter through a joint venture or full ownership. Interestingly, cultural distance has a strong negative effect on subsidiary performance but no effect on the performance of the whole multinational company. In addition, we find that the effects of cultural distance are not sensitive to time, but they are sensitive to the cultural framework used (e.g., Hofstede vs. Global Leadership and Organizational Behavior Effectiveness) and the home country of the company (developed vs. emerging market). Based on our study, we feel confident to offer some theoretical insights, recommendations for improving the validity and reliability of cultural-distance research, and ideas for future research.
This conceptual paper explores the implications of servant leadership and sustainable leadership for strategic decision making by the top management of an organization. It is argued that a different type of leadership is required if effective strategic decisions are to be made in organizations striving to become more sustainable and that servant leadership and sustainable leadership approaches provide a sound basis to inform these decisions. The contributions of these two leadership approaches are explored, before considering the implications for leadership development. Particularly, the inclusion in leadership development programmes of values based leadership, and the development of integrative thinking, is discussed.
This article studied and compared the two nonprobability sampling techniques namely, Convenience Sampling and Purposive Sampling. Convenience Sampling and Purposive Sampling are Nonprobability Sampling Techniques that a researcher uses to choose a sample of subjects/units from a population. Although, Nonprobability sampling has a lot of limitations due to the subjective nature in choosing the sample and thus it is not good representative of the population, but it is useful especially when randomization is impossible like when the population is very large. It can be useful when the researcher has limited resources, time and workforce. It can also be used when the research does not aim to generate results that will be used to create generalizations pertaining to the entire population. Therefore, there is a need to use nonprobability sampling techniques. The aim of this study is to compare among the two nonrandom sampling techniques in order to know whether one technique is better or useful than the other. Different articles were reviewed to compare between Convenience Sampling and Purposive Sampling and it is concluded that the choice of the techniques (Convenience Sampling and Purposive Sampling) depends on the nature and type of the research.
This paper examines the entry of Indian information and communication technology–information technology-enabled services (ICT-ITES) companies on the Dutch service outsourcing market. Using this case study, the paper integrates two academic debates: the rise of emerging country-based multinationals and the international dynamics in the ICT-ITES sector. Indian ICT-ITES firms can no longer only rely on cheap labour in their home country and need to build global delivery capacity in order effectively to compete with Western ICT-ITES multinationals. By examining their entry strategy in the Dutch service outsourcing market, this paper highlights the difficulties of latecomer multinationals in entering the more profitable domains of the ICT-ITES market.
A network approach, as it is developed by some Swedish researchers in industrial marketing and international business (see e.g. Hägg 6 Johanson (ed.), 1982 and Hammarkvist, Håkansson & Mattsson, 1982) is compared with the transaction cost approach associated with Oliver Williamson (e.g. Williamson, 1975, 1979, 1981). The reason we make such a tomparison is that we often get questions from colleagues in the scientific community, suggesting that what we try to do is rather similar to what the transaction cost approach is doing.
This paper examines the Malaysian Chinese firms that have expanded into Vietnam. Based on research and qualitative personal interviews with Malaysian Chinese firms that have invested in Vietnam, the paper unpacks the entry modes that these firms have undertaken. It argues that the Malaysian Chinese firms prefer joint ventures in their Vietnamese businesses to wholly-owned subsidiaries and personal direct investments. This paper also argues that such investments are often embedded in social and intraethnic ties, which connect Malaysian Chinese firms with Vietnam's ethnic Chinese businessmen. To this end, these firms tend to rely on informal ties and nonmarket institutions in the form of the ethnic Chinese business networks. Nevertheless, the Malaysian Chinese firms are not averse to collaborating with nonethnic Chinese firms that enjoy a good relationship with the Vietnamese state. This observation is especially marked in the property and construction, and finance sectors.
Why have relatively poor and underdeveloped countries been able to spawn so many global firms in the last two decades? Are emerging market multinationals (EMNCs) really different from successful multinationals from developed economies? This book tackles these and other fundamental theoretical questions about EMNCs. A distinguished group of researchers assesses the unique strategies and behavior of successful EMNCs, from the Chinese telecommunications firm Huawei to the Indian conglomerate Tata, to the South African beverages firm SABMiller. They address a range of topics, such as the drivers of internationalization by EMNCs; their distinctive process capabilities; how they catch up with established rivals on technology; how state ownership or business-group affiliation affects their behavior; and why they sometimes relocate their headquarters to advanced economies. This book will appeal to scholars and graduate students in global strategy and international business, as well as consultants of multinational companies, looking for state-of-the-art analysis of EMNCs.
Widely used internationalization theories (e.g. Uppsala model) unfortunately do not explain phenomenon of accelerated and rapid internationalization. E-marketing role in the process of firms’ business expansion outside the national boarders has not been evaluated. As the Internet, ICT and e-marketing provided new opportunities for developing business abroad, internationalization model has to be adapted to accommodate a changed environment (Becker, 2012). The aim of the paper is to propose a revisited conceptual internationalization model from e-marketing perspective. The designed conceptual internationalization model integrates revisited internationalization antecedents – information availability and usage, international mindset, international business networks and communication interactivity - and e-marketing strategy and tactics perspective leading to internationalization process success.
Purpose
– The purpose of this paper explains how the framework on motives of foreign direct investment (FDI) needs to be rethought when analyzing emerging market multinational enterprises (EMNEs). It argues that the weak position of emerging market firms and their interdependent relationship with lead firms in global value chains (GVCs) modify the selection of internationalization motives.
Design/methodology/approach
– The arguments are illustrated through a critical review of the literature on FDI motives and a discussion on how the literature can be extended from looking through the lens of emerging market multinationals, particularly those with early development as suppliers in global value chains.
Findings
– The weak position of emerging market firms and their interdependent relationship with lead firms in global value chains modify the selection of internationalization motives on two aspects. First, internationalization decisions of EMNEs in GVCs are not undertaken in an independent manner. Rather, decisions are influenced by the initial position along the value chain and the dynamic relationships that these EMNEs have with lead firms. Second, the selection of FDI motives of these EMNEs reflects both their international expansion strategy and the upgrading effort they wish to pursue to undertake higher value-adding activities along the GVCs.
Originality/value
– These implications addressed in this paper add more nuances to the interpretation of FDI motives. Previously viewed mainly from the perspective of lead firms, FDI decisions are considered as independent alternatives that multinational enterprises (MNEs) can undertake to fulfill their internationalization strategy. Revisiting the FDI motives from the perspective of EMNEs reveals further insights on the interdependent nature of their internationalization, particularly reflecting the weaker position of EMNEs and their interdependent relationship with lead firms in their industry.
Market entry strategy is used to make the firm's entering new foreign market possible to expand their businesses in terms of services, products, technology, human and other resources. It requires the firm to decide which market to enter (market selection decision), how to enter (entry mode decision), and when to enter (entry timing decision). Hence, focusing on the market selection decision is one of the important dimensions in the process of internationalization and is crucial in order to ease the complexity and difficulty of global market expansion. The main objective of this study is to investigate the factors that are of critical significance influencing market selection decisions by Malaysian construction firms into international market. Questionnaires were sent to one hundred nine (109) firms listed under Construction Industry Development Board (CIDB) Malaysia giving twenty one percent response rate. Factor analysis was used to group the twenty-seven factors into four specific-factors namely; firm, country, industry and project. The findings from regression analysis carried out revealed that the project-specific factors have contributed significantly to the firms’ market selection decision to penetrate international market. These factors which are loaded highest in order of significance were the “intensity of competition”, “existence of strict quality requirements”, “proximity to competitors”, “proximity to host country” and “firm international competitiveness”. This study illustrates the determination of the specific-factors influencing the firms’ decision related to market selection into international domain. It is hope that the findings would offer valuable information to Malaysian construction firms with intention to internationalize their businesses.
Purpose – The article provides a discussion of the relevance of motives for companies’ internationalization.
Design/methodology/approach – Conceptual discussion building on established classifications of motives of internationalization, which distinguish between market-seeking, efficiency-seeking, resource-seeking and strategic asset-seeking motives.
Findings – The analysis demonstrates that important issues in companies’ internationalization differ systematically across different types of motives, which implicates that motives remain relevant when analyzing various aspects of the internationalization of the firm. Motives are also useful elements for theory building in international business.
Research limitations/implications – The analysis is purely conceptual and is not further substantiated by empirical evidence.
Practical implications – The classification of motives is a useful tool for companies to analyze their strategic alternatives and actions, especially with regard to performance measurement.
Social implications – A clear classification of the various motives for companies’ foreign activities is essential for formulation of sound policies about attraction/stimulation and regulation of companies’ inbound and outbound internationalization.
Originality/value – The article demonstrates the importance of retaining a clear classification of motives as a basis for further development of a theory of firms’ internationalization behavior.
The European Union is one of the largest recipients of outward foreign direct investment from emerging economies. We apply different discrete choice models to analyze the location choice of 4555 emerging market firms in 93 sub-national regions of the European Union. In particular, we test to what extent these firms’ location choices are related to agglomeration economies and knowledge externalities, because these have been suggested as potential sources to propel learning and technological catching-up. Our results indicate that emerging market firms’ location choices are positively affected by agglomeration economies and knowledge externalities. In addition, we can identify differences in the valuation of various sub-national location factors as well as differences in the substitution pattern between alternative regions for firms originating from emerging markets. The evidence supports the argument that emerging market firms use outward foreign direct investment to augment ownership specific assets.
Past studies on contractor internationalization have adopted a single model approach. Responding to the call of some scholars, this study has been conducted by integrating several extant theories of internationalization. Our study has investigated the internationalization of Pakistani contractors. The features examined in this paper are motives, international markets ventured and locational factors. The data has been collected using a questionnaire survey. A quantitative approach has been adopted to examine the data from 84 Pakistani contractors registered with Construction Association of Pakistan (CAP). The results of the study showed that Pakistani contractors are more influenced by the internal motives rather than external motives. The main markets ventured by Pakistani contractors were United Arab Emirate, Saudi Arabia and Qatar. The study showed that surveyed contractors evaluate a wide range of factors before making the decision to enter the foreign markets. Further, it shows that size of market and potential economic growth are the major concern among the locational considerations.
Purpose
– This paper aims, by a direct comparison, to address the differences and similarities of the internationalization processes of multinational companies both from developed and emerging countries.
Design/methodology/approach
– This study employed qualitative approach, using an integrated model of internationalization process. Multiple case studies, with two companies with significant involvement in foreign markets and originating in countries with different levels of development, were carried out.
Findings
– The results reveal that the case companies show some differences with regards to their use of ownership advantages to facilitate their internationalization. On the other hand, learning and experience of internationalization, coupled with the use of networks, have been factors that have influenced the pace and the pattern of the case companies' internationalization. An integrated model, which includes variables related to networks and learning/experience, may contribute to the understanding of the case of multinational companies from emerging economies.
Originality/value
– Although the research field of emerging multinationals has been growing lately, very few attempts have been made in the sense of directly comparing the internationalization process of firms from both developed and emerging countries. The authors proposed an integrated analytical model that draws on insights from the eclectic paradigm and the Uppsala internationalization model.
Business transactions within the Muslim world have received only limited attention from International Business scholars. This exploratory study investigates whether a shared adherence to the Islamic tradition can reduce perceived cultural distance between countries, thus affecting the internationalisation pattern of firms. The experiences of six small- and medium-sized enterprises in the electronics and electrical (E&E) sector in northern Malaysia are presented. The findings suggest that a mutual affiliation to Islam among countries does contribute to reducing cultural distance, thus also affecting the path of firm internationalisation.
During the last decade emerging market firms (EMFs) have increasingly attracted scholarly attention. Yet, the conclusions concerning the nature and the theoretical foundations of EMFs’ international expansion vary greatly thus calling for a critical assessment of the existing theorizing in this field.
We examine publications on the internationalization of EMFs in fourteen top international management (IM) journals in the period of 2000–2010 and use the inductive approach and the qualitative content analysis methodology.
Our analysis shows that the published research can be classified into two groups: macro- and micro-level studies. The former predominantly employ macro-level institutional factors to examine the overall patterns of EMFs’ international expansion, while the latter build on a wider range of approaches, including the resource-based view, network and strategy perspectives to investigate various aspects of EMFs’ internationalization.
The paper identifies a number of theoretical inconsistencies in the existing research that arguably cause ambiguity in findings and suggests future research directions to address these inconsistencies. By doing so the analysis contributes to the central debate in literature concerning whether conventional theories suffice to explain the EMFs’ internationalization or new theoretical approaches are needed.
The analysis illustrates that the research on EMFs’ internationalization can be improved through refined application of a broader range of methodologies such as longitudinal and mixed-method studies. The geographic focus of studies needs to be widened as well. Currently it is clearly biased towards China, while other emerging markets remain under-researched.
Research on acquisitions has typically focused on acquisitions per se, examining issues such as performance and implementation problems. This study moves beyond that perspective and studies the influence on a firm's later expansions. We argue that exploitation of a firm's knowledge base through "greenfields" eventually makes a firm simple and inert. In contrast, acquisitions may broaden a firm's knowledge base and decrease inertia, enhancing the viability of its later ventures. Over time, firms strike a balance between the use of greenfields and acquisitions. Various implications of this theory-tested with survival analysis and "logit" models-were strongly corroborated.
One of the most significant changes in the global economy today is the strong increase in outgoing foreign direct investment (OFDI) from emerging economies to industrialised countries. Whereas investment in less developed countries is often motivated by the sourcing of natural resources and cheap labour, knowledge and technology-seeking is an increasingly important motive for emerging multinationals investing in developed economies. The current paper is focussed on the role of emerging multinationals as knowledge-transfer agents and pursues three aims: First, to unravel the distinguishing features of emerging multinationals (as compared to ‘traditional’ multinationals), secondly, to critically discuss the usefulness of conventional theoretical concepts in explaining this new phenomenon and thirdly, to launch a research agenda for near-future research on emerging multinationals, with a particular focus on the economic geography of international knowledge flows
Purpose
Emerging market multinational enterprises (EMNEs) have consolidated their global presence recently, challenging existing international business (IB) theories. One of their most significant characteristics has been the prevalence of strategic asset-seeking (SAS) mergers and acquisitions (M&As) targeting firms in developed countries. Such SAS M&As have been ascribed to the aim of acquiring or augmenting firm-specific advantages, rather than exploiting existing advantages. A literature review is needed to synthesize the growing number of academic studies and to contribute to ongoing theoretical developments on EMNEs' catch-up strategies.
Design/methodology/approach
The authors follow a standard systematic literature review approach. The authors collate academic studies on EMNEs' SAS M&As in developed markets published between 2000 and mid-2020, structuring the analysis using the logic of antecedent, process and performance outcomes.
Findings
The authors present recent research trends in terms of year, journal, theories and methods. The authors synthesize and analyze existing knowledge on EMNEs' SAS M&As and identify remaining gaps to suggest future research directions.
Originality/value
The review contributes by focusing on the key argument of current EMNE research – SAS M&As. By providing the first focused review on this topic, it provides a basis for further research on EMNEs' SAS M&As.
Purpose
This paper aims to explore the internationalisation of service-sector small- and medium-sized enterprises (SMEs) from an emerging market, focussing on the entry modes, psychic distance, business network, internationalisation challenges and capabilities of business training and consultancy firms from Malaysia.
Design/methodology/approach
A multiple-case study approach is adopted, and 31 in-depth interviews were conducted with the top management and executives from eight business training and consultation (BT&C) firms in Malaysia. The Uppsala model is used for theoretical guidance to analyse the internationalisation of the firms.
Findings
The results suggest that psychic distance, business network and business capabilities influence the internationalisation of BT&C firms from Malaysia. However, the discussion of entry modes in the framework of service internationalisation does not accurately explain the internationalisation of the studied firms.
Research limitations/implications
This study is a qualitative research based on the experiences of eight firms. The basis of this study is inadequate for scientific generalisation. Quantitative research should be conducted in the future to provide a statistical test and empirical results. This study is concerned with the emerging-market context. The study could be expanded to include more industries and other emerging markets in the future.
Practical implications
This study explored the application of internationalisation theories to the BT&C industry in an emerging market, with particular emphasis on firms’ entry modes, psychic distance, business networks, international challenges and capabilities. This study also highlighted some of the key internationalisation challenges facing emerging market small- and medium-sized enterprises (EMSMEs), underlining the importance of business networks and capabilities.
Social implications
Nevertheless, this study shares useful and practical discoveries concerning the internationalisation process of BT&C firms from the emerging market, focussing on entry modes, psychic distance, business network, the challenges faced and the required capabilities.
Originality/value
The study provides new insights into service internationalisation in SMEs from an emerging market. The application of internationalisation theories to the BT&C industry in an emerging market is analysed.
Purpose
The purpose of this paper is to analyze how path dependence in the evolution of major theories of foreign direct investment (FDI) locked in a theoretical perspective of the multinational enterprise that focused on asset-exploitation. This perspective is challenged by recent contradicting observations of multinationals from China and other emerging economies. A decisive re-orientation of FDI theory is proposed as a way forward to resolve this tension.
Design/methodology/approach
Placing FDI theories into the context of FDI patterns prevailing at the time they were developed, Thomas Kuhn’s framework on the evolution of scientific knowledge is employed to track how the mainstream FDI theory emerged, went through a period of normal science and then approached a crisis of science in this field.
Findings
The evolution of FDI theory is strongly path-dependent, which made it difficult for theory to effectively incorporate new conceptual discoveries and empirical findings about the nature of FDI activity.
Originality/value
FDI theory would benefit from a full re-orientation to a demand-oriented perspective which places the pursuit of advantages, assets, resources, etc., at the core of the theory. Such a change is implicit in many recent theoretical advances and would assure theory is generalizable to all types of FDI.
This paper investigates the impacts of different network ties on export propensity of Vietnamese small and medium enterprises (SMEs) in the manufacturing sector. Using data from a survey of over 2,600 manufacturing SMEs in 2015, we found that social networks contribute positively to the export propensity of SMEs, while the size of business networks negatively associates with the likelihood of export. However, bank networks and political networks are not significant for the propensity to export of Vietnamese SMEs. We discuss the results in detail and offer recommendations for SME owners, managers and policy makers.
We investigate the effects of four macro variables (trust and cultural, institutional, and geographical distances) on the propensity to form a strategic alliance. From a set of 26 countries, we construct 315 country pairs over the period from 1996 to 2004. We collect our data from the SDC platinum database that identifies how many cross-border strategic alliances occurred between the firms in the country pairs in each year. For each country pair we construct measurements for the macro variables. Then in a multivariate framework, we examine their effects on the number of cross-border alliances. We find that the cross-border alliances are more likely to occur between firms from countries that have higher trust and shorter cultural and geographical distances—the institutional distance does not have an effect. Additional tests show that greater trust lessens the adverse effect of geographical distance, but a shorter cultural distance does not.
Purpose
The purpose of this paper is to show that existing theories, principally Dunning’s OLI model, Mathews LLL model and Rugman’s version of internalization theory are unable to explain the rise of emerging market multinationals (EMNEs). The reason is that they over-emphasize the strategic importance of intangibles and ignore that of complementary local assets. Taking complementary local assets into account makes it possible to understand why EMNEs are able to finance their intangible-buying sprees and, often with the help of their governments, to swap market access for technology.
Design/methodology/approach
This is a conceptual paper based on the bundling model (JIBS 2009) and backed by the case histories of four EMNEs.
Findings
The author shows that EMNEs have much better prospects vis-à-vis established MNEs than generally thought in Western Europe and the USA and that they will become serious competitors.
Originality/value
This is, as far as the author knows, the first explanation of why EMNEs have the bargaining power and the resources necessary to swap or buy technology from established MNEs.
The aim of this paper is to highlight the importance of the firm’s strategic objectives regarding the choice of countries for foreign expansion, complementing the existing literature on the internationalisation process. Through a multiple case study methodology, we conduct a comparative analysis of three Brazilian ventures that have internationalised in Italy, and three Italian firms that have internationalised in Brazil, seeking to investigate the firms’ decisions on the selection of foreign markets. We consider jointly the objective aspects of distance, the overall perceptions of the decision-makers in relation to the differences between the domestic and (potential) host countries, and the firm’s strategic objectives. This research contributes to International Business studies by revealing the role of firm-specific strategic objectives as determinants of foreign market selection, in addition to, or even on top of, the dimensions of objective distance and psychic distance.
This is the second edition of the celebrated volume by Professor John H. Dunning, first published in 1993, which has now been not only updated but also enriched with the addition of a number of new topics. This addition was not least due to the expertise of the co-author, Sarianna Lundan, in the institutional aspects of international business and the internal governance of transnational corporations (TNCs). It is a comprehensive synthesis of all the theories in International Business based on extremely rich data evaluation in almost all fields of TNC activities and their environment. It is a “creative masterpiece which unbundles the DNA of the field of international business” as described by Alan Rugman in his assessment of this volume.
Traditionally, few companies were worried about Chinese, Indian, or Russian companies becoming important global players. Now companies from emerging market economies are starting to do just this and are emerging as significant global competitors. It is clearly time to pay attention to emerging market multinational corporations as serious competitors. This article seeks to help with this task by investigating the internationalization of firms from China, India, and Russia, and developing an understanding of what firms from transforming economies should do to increase their chances of success. The article also shows that they internationalize for different reasons using different entry mode ordering and by initially entering different countries than would their Western counterparts. This article develops a new framework called the Five M framework to guide managers and academics in their understanding of the internationalization of firms from transforming economies. With the help of illustrative examples from 18 mini case studies, this article investigates the motivations, markets, entry modes, methods, and management practices that have allowed these firms to be successful.
This article first traces the changing world economic scenario for international business over the past two decades, and then goes on to examine its implications for the location of foreign direct investment and multinational enterprise activity. It suggests that many of the explanations of the 1970s and early 1980s need to be modified as firm-specific assets have become mobile across natural boundaries. A final section of the article examines the dynamic interface between the value-added activities of multinational national enterprises in different locations.
Purpose
– This strategy-learning case traces the growth of AlphaTech, a publicly traded company in Brazil that is a management software company. The purpose of this paper is to debate whether or not the firm should give more emphasis to internationalization, given its high market share in Brazil, where further gains may be very expensive and difficult. The case is intended to serve as a vehicle to discuss the internationalization process of a software firm from an emerging economy.
Design/methodology/approach
– The case was built using several sources of information, including interviews with two executives in charge of the firm's internationalization process, articles in business newspapers and magazines, a book written by the firm co-founders, reports, and information gathered in the internet.
Findings
– The main issues posed by this case study are: first, the difficulties faced by an emerging market firm to get a sustainable position in international markets; second, the challenges of competing with powerful global multinational corporations (such as SAP and Oracle) in the international marketplace; and third, the need to adapt the firm's international strategy to new threats and opportunities.
Originality/value
– The Brazilian context differs from other BRICS, since Brazilian software firms do not have access to low-cost labor and therefore cannot adopt a low price strategy to compete effectively in international markets, but rather need to build unique capabilities to overcome liabilities of foreignness.
The purpose of this study is to characterise the environmental management systems (EMS) certification process (International Organization for Standardization (ISO) 14001) in Portuguese small and medium enterprises (SMEs) following quality management system (QMS) certification (ISO 9001). The study is based on a sample from Portuguese SMEs which characterise the local reality in terms of companies certified in accordance with ISO 14001 after ISO 9001 certification. Some Portuguese SMEs have the EMS implemented but not certified, mainly given the lack of investment support and because it is considered merely a form of marketing. As such, they do not feel motivated to certificate an EMS in the company since they consider that it is a form of advertising and not a way to protect the environment. Nonetheless, it is already evident form other Portuguese SMEs that gained EMS certification that gains supersede marketing benefits and allow for evermore enduring benefits such as prevention of environmental risks, environment protection, improved company image, compliance with legislation and efficient use of natural resources. This paper also presented the main difficulties in achieving an EMS certification, including high certification costs, human resources, motivation issues and difficulties in changing the company's culture.
Purpose
– The purpose of this paper is to investigate the international business strategy, key driving factors and the major barriers that may hinder the internationalisation progress of Malaysian small and medium-sized enterprises (SMEs).
Design/methodology/approach
– Based on the aims of the study, the paper encompasses both quantitative and qualitative data. For quantitative data, structured questionnaires were used, and a total of 216 SMEs that engaged in international business participated using purposeful sampling, covering all the states in Peninsular Malaysia. For the collection of qualitative data, the study involved in-depth interviews with 25 owners/managers of SMEs.
Findings
– The findings indicate that the motives of SMEs for international expansion are varied, and that SMEs still face many institutional challenges, which have prevented them from making a greater contribution.
Research limitations/implications
– Due to lack of resources, firms from West Malaysia were included. West Malaysian firms may well possess characteristics concerning the challenges and issues to internationalisation that are unique to their region.
Originality/value
– The paper addresses a knowledge gap in respect of the internationalisation process of SMEs in the context of Southeast Asia. The findings of this paper will have relevance for policymaking and supportive measures at the government level to create an environment that will stimulate the competitiveness of SMEs in their attempts for internationalisation.
The extant literature on emerging market multinationals (EMNEs) suggest that they derive their advantages from country-specific advantages (CSAs) such as economies of scale, as opposed to traditional firm specific advantage (FSA) such as technology. We use firm level data from the Chinese electronics industry and an empirical methodology that has thus far not been used in the literature to provide clear empirical support for this proposition. Further, we demonstrate that not all emerging market firms can leverage CSAs equally and that EMNEs are better at exploiting CSAs than their non-MNE domestic counterparts. We also demonstrate that developed country MNEs operating in emerging market economies are not as good as leveraging available CSAs as their EMNE competitors, arguably on account of liability of foreignness. Our results have implications for outward investment by emerging market firms as well as for the ability of developed country MNEs to significantly benefit from efficiency-seeking FDI in emerging market economies.
As supply chain activities become more dispersed among customers, suppliers and service providers, there is an increased need for customers and suppliers to work together more closely. Supply chain integration (SCI) has been a highly researched topic during the last 20 years. A meta-analytic approach is used to provide a quantitative review of the empirical literature in SCI, and examines relevant design and contextual factors. Eighty independent samples across 86 peer-reviewed journal articles, yielding a total of 17,467 observations, were obtained and analyzed. While general support exists in favor of the positive impact of SCI on firm performance in the literature, this research helps clarify mixed findings that presently exist. Our results indicate that there is a positive and significant correlation between SCI and firm performance. Additional subgroups and moderators are tested and provide nuanced views of the scope and specific dimensions of SCI, firm performance and their relationships.
Building on the institution-based view of strategy, I study the impact of pro-market reforms on developing country firm multinationality. I propose that reforms increase multinationality by reducing institutional imperfections and increasing domestic competition, thus inducing firms to expand internationally. However, I argue the effect is higher for private firms than state firms because the former are compelled to be more responsive to institutional changes and opportunities in order to survive. Three-level RCM Poisson analyses of a panel of the largest firms in Latin America for the period 1989 to 2009 provide robust support for the arguments.
This study examines the internationalization of high technology small and medium enterprises (HTSMEs). It explores how they develop and use networks to penetrate their first foreign market relying on information collected via direct interviews with the CEOs or founders of 58 high technology small firms that operate internationally. It uses mixed methods to discuss the network building mechanisms identified — client–supplier relationships, existing personal contacts, contacts acquired by chance, and contacts acquired through specific strategies. The findings provide the basis for developing propositions for further comparative analyses of the internationalization of HTSMEs based in emerging and developed markets. The study contributes to the literature on networks, internationalization and international entrepreneurship.