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The Development of International Business

A Narrative of Theory and Practice

Robert Pearce

In this wide-ranging and groundbreaking new book, Robert Pearce provides an analytically-informed basis for understanding the modern multinational enterprise. It does this by tracing the development over the past half-century of two parallel strands of analysis in International Business; designated as the ‘theoretical’ and the ‘practical’. The book shows how the practical restructuring of the MNE as an organisational form has responded to changes in the wider global economy and how this evolution has interfaced with the enriching of the relevant theorising. By tracing the persisting dynamics of the MNEs’ structure and strategic positioning it demonstrates how what it is now can be used as a template for understanding and organising its further evolution as additional changes condition its environment.
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Chapter 8: Multinationals from emerging economies: a new challenge of practice to theory

A Narrative of Theory and Practice

Robert Pearce

Extract

The established mainstream theorising in IB (expounded in Chapters 2, 3, 5, 6) was based on MNEs from fully industrialised ‘Western’ economies. This then assumed that firms internationalised when they felt confident in their ability to do so and could discern reasons for doing so. The recent appearance of significant numbers of MNEs from emerging economies (that is, at relatively early stages in their technological and industrial development) has been argued to defy the basic tenets of IB and to need new theorising. This chapter aims to refute this. Firstly, by showing how the extant theorising can help clarify the precise nature of the challenges raised by the EE-MNEs. They expand internationally before the level of development of their home country should have allowed them to generate the competitive capacities to do so. Secondly, by then repositioning elements of the established analytical approaches so as to provide a coherent understanding of the new EE-MNEs. The essence of the later viewpoint is to see these new MNEs as integral to the ongoing development of their home country. There are two strands to this. One, that they are able to overcome the vulnerability of their in-house competences by various supports (capital; foreign exchange; diplomatic support) from their home country. Two, they secure this support by projecting their ability to achieve international objectives in support of their country’s ongoing developmental needs. As exemplified by the case of China there are two such needs discerned. Access to resources (a ‘resource-seeking’ role for the MNEs) that become necessary to underpin the persistence of current developmental priorities (based primarily on low-cost labour). Secondly, access to new innovation-supporting technologies (KS strategies for MNEs) so as to help create new directions for development.

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