The internationalisation of firms from emerging and transition economies has become a rather debatable area of research in international business (IB). The debates are often drawn to the issue whether well-established theories in IB can offer plausible explanations of the motives and approaches used by firms from these economies when internationalising and serving foreign markets. While such firms are usually lagging behind in the scope and scale of their international activities when compared to their developed economy counterparts as they come from economies that are arguably at the lower stages of the Investment Development Path (Dunning and Narula 1995; Gorynia et al. 2007; Bensebaa 2008; Kutzel 2017), many of these firms, especially when positioned in niche markets, engage in rapid early internationalisation showing enviable agility and adaptability supported by innovative solutions either targeting specific unmet customer needs or formulating offers that can satisfy existing needs in new ways and at a lower price point.
Firms that succeed in their international markets are embedded in the home market resource capital (Child and Marinova 2014) in the form of natural endowments, knowledge base, technical expertise, and social spaces (Marinova and Marinov 2017) and are fast learners in the internationalisation process. They compensate for resource deficiency through network attachments in the form of knowledge-based network ties (Masango and Marinova 2014), social ties in own, family or diaspora spaces, or through being part of larger business groups or international value chains.
Many of these firms may seek internationalisation to spread risk that is often higher in their domestic markets, trying to compensate for home market or institutional inefficiencies, unpredictability and volatility. While access to home country resource capital, in its various shapes and forms, is a basis for the internationalisation of emerging and transition economy firms and a key compensatory mechanism for limited financial resources, many of these firms internationalise without having access to home country institutional capital or even despite the limitations of not having access to such capital in their home country environment and notwithstanding country-of-origin liability, supplemented by liability of newness, smallness and outsidership to Western host market networks. Arguably, they may use composition capabilities that allow ordinary firms with limited ordinary own resources to creatively integrate them with readily available open resources in order to achieve fast speed of adaptation to international market requirements and favourable price-value ratios for consumers (Luo and Child 2015).
Whether their success in internationalisation is associated with specific local production expertise or application of home country resources, or with knowledge, innovation and opportunity creation, firms from emerging and transition economies demonstrate speed, agility, and aspiration to āmake it happenā in markets and find clients wherever they are and whatever their institutional or resource conditions. Their internationalisation is not necessarily unidirectional, instead it is multidirectional often combining market entry, expansion and withdrawal at one and the same time in relation to a multitude of markets in search for a portfolio of customers that can secure financial income in the short, medium and long term.
While industry is indeed an important institutional setting for the internationalisation of these firms, providing a possible shared learning and capability development platform in the case of clusters (Lattemann et al. 2017), more often transition and emerging market firms tend to compete against those alike as co-operation and joint economic utility is sometimes perceived as a remnant of the collective socialist past rather than another way to learn in the market-led present. Nevertheless, there have been some achievements in this regard in IT clusters, service provision and manufacturing clusters.
Central and Eastern European Perspectives on Internationalisation
Central and Eastern European (CEE) companies offer a fascinating platform for research on internationalisation in transition economies. The analysis of the internationalisation process of CEE firms can provide better understanding of the similarities and differences in the pathways to foreign market expansion used by CEE firms compared to those suggested by theories devised on the examples of developed market firms (Jindra et al. 2015). CEE companies originate from countries on a range of economic development levels although historically and culturally they form an area that shares similarities in their geographic position and in their economic development post-WWII that allow scholars to group them loosely together.
According to the statistics in the World Investment Report (WIR 2018), Russia holds a leading position among the transition economies in foreign direct investment (FDI) outflows with US$36 billion in 2017, an increase of 33% compared to that in 2016). Among the transition economies second in FDI outflow is Azerbaijan with an amount just a tenth of the Russian one and standing at US$2.6 billion. However, defining the exact area under study is challenging, as the countries in scope are not strictly limited by specific geographic boundaries or cultural determinants because the latter are often underpinned by ethnic similarities and belief systems, among others. For example, the WIR does not include European Union (EU) countries at an advanced level of development such as Estonia, Latvia or Lithuania in transition economies, while in this book these three are considered as CEE countries and therefore included in the scope of the volume. Yet the small size and limited economic clout of these countries hardly makes much of a difference when analysing FDI outflows, as in 2017 only Poland (with US$3.6 billion) and the Czech Republic (with US$1.6 billion) exceeded the billion-dollar mark (WIR 2018). Therefore, with the clear exception of Russia, the CEE area is largely made up of smaller economies at varying levels of development.
The heterogeneity of the area is also noted in a literature review of 42 studies on the internationalisation of CEE companies in the period 1989ā2010 (Wilinski 2013). The review paper draws special attention to the advantages of Russia and the EU countries in research focusing on the drivers, processes and entry strategies of internationalising CEE companies, yet it points to a continuing need to understand why most CEE companies have not been internationally as successful as comparable companies from the Asia-Pacific region. The underlying reasons for the international obscurity of companies from the CEE region require greater scrutiny, especially considering their close proximity to and cultural familiarity with the developed EU markets, which are targets for the internationalisation of CEE firms (WIR 2018).
Karasiewicz and Nowak (2014) found out that the internationalisation of Polish firms follows a U-shaped curve and reaping the greater performance benefits requires time to build international experience and ownership advantages, and thus most Polish companies are still at an early stage of internationalisation. Some support, but from a different perspective, for this is offered by Jankowska and GÅowka (2016), who argue that Polish clusters are at an early stage of internationalisation and have a low level of interaction, therefore, providing fewer opportunities for knowledge exchange, co-operation and experiential learning than their Western counterparts have. Agreements such as the Visegrad Group between the Czech Republic, Hungary, Poland and Slovakia have been set up to bolster co-operation between countries that share historical and cultural ties but even with such linkages, internationalisation of business ventures is at a low level. Consequently, a more consolidated network approach might offer insights into the differences in the internationalisation of CEE and Asian firms, where business networks have a well-documented prominent position in firm internationalisation.
The rapid transformation and reforms of transition economies have forced companies to react differently to the dramatic changes in the business and institutional environment. Internationalisation has driven innovation and has forced companies to develop innovation capabilities (Boermans and Roelfsema 2012). Conversely, the presence of foreign firms in CEE has had a positive spillover effect and has become a source of learning in transition economies, where inward FDI has been found to enhance domestic firmsā internationalisation endeavours (Andreff and Andreff 2017). Future research is therefore needed on learningāeither learning from more experienced partners, from experience, or from internal networks. While CEE companies have in general taken great strides toward internationalisation, a more profound explanation for their internationalisation performance is still at an early stage of development.
African Perspectives on Internationalisation
The internationalisation of African firms has ...