Research Handbooks in Business and Management series
Edited by Mehmet Demirbag and Attilia Yaprak
Chapter 2: Punching above their weight: the sources of competitive advantage for emerging-market multinationals
A boxer, facing a heavier opponent, must learn to punch harder. This chapter comprehensively reviews the sources of competitive strength of emerging market multinationals (EMMs). Since most lack firm-specific assets such as internalized knowledge or globally recognized brands, especially in their early international growth, and emanate from less-developed nations, the success of EMMs has to be explained by identifying factors in their home nations and international scope which make these firms internationally competitive. This chapter identifies several including the mindset of top management of EMMs (such as long-term orientation, global or cosmopolitan perspectives, a degree of humility that recognizes the need to catch up by learning from foreign allies and customers, tolerance for ambiguity, and frugality) and home-country cultural traits such as emphasis on relationships, family control, and private equity capital. Other sources of competitiveness may lie in the home-country pool of technical talent and cheap labor, the extensive diasporas of persons of Chinese, Indian and Brazilian origin, and the role of common language as determinants for the geographical pattern of foreign direct investment (FDI) from emerging nations. Since conclusive evidence is still unavailable, many of these factors are proposed as hypotheses for future empirical research.
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