Internationalization of Emerging Economies
Due to their consistent successful international expansion, emerging economy firms have continually attracted the attention of international business scholars. They face them with a plethora of challenges as existing international business theories, developed overtime in the Western context, often inevitably fail to explain how emerging economy firms internationalise and what accounts for their successful foreign operations. While emerging economies were in the past seen as markets and/or providers of resources targeted by expansion and opportunistic driven Western firms, present-day multinationals from emerging economies have become their contestants in multiple fields and industries worldwide. Besides, digitalisation, provide opportunities for firms, more importantly small companies, regardless of their origin, compete successfully in the world marketplace where many small and medium-sized firms from emerging economies have established their international presence.
Multinational firms form the BRICS countries—Brazil, Russia, India, China and South Africa—as well as the Next 11 nations, namely Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, South Korea, Turkey and Vietnam among numerous others have already gained recognition as leaders or challengers in their industries worldwide.
Indian companies started sluggish internationalisation in the 1970s, activated the process in 1990s and in the early 2000s became marked a surge period of international activities causing upgrading of India’s international competitive advantages in inexpensively provided technical expertise and knowledge built over the preceding decades of piling international experience (Ramamurti and Singh 2009). Research on multinational companies from Latin America is an emerging area (Casanova 2009), with an emphasis on Brazil (Fleury and Fleury 2011). Their international activities and research intent have taken an essentially regional position. Yet truly balancing the theoretical implications of international expansion and institutional influence are to be fully addressed (Lopez-Morales 2018). Russian geopolitical influence, abundance in natural endowments and government support have put Russian multinationals as important players in the global arena (McCarthy et al. 2009; Panibratov 2012). Least research seems to be the internationalisation of firms from South Africa (Matthee and Krugell 2012). Though most researched the internationalisation of Chinese firms in comparison with all other emerging economy contexts (see e.g., Alon et al. 2018) the second part of this book is deducted to the newest developments of their internationalisation.
The unit of analysis of research on emerging economies has a macro or country level perspective investigating the dynamically changing contexts of these world spread environments (Marinov and Marinova 2012). Extant studies investigating the internationalisation of emerging economy firms take mostly a micro perspective exploring a broad number of issues ranging from home government support emerging economy firms are provided in the process of their internationalisation (e.g., Wang et al. 2012), to country-and firm-specific advantages/disadvantages impacting their foreign operations (e.g., Child and Rodrigues 2005; Marinova et al. 2011). Many emerging economy firms lack assets, hence resource-based advantages for internationalisation in developed economies. To develop successful international operations in other emerging economies, when there are environmental and institutional similarities from home and host country perspectives (e.g., Cuervo-Cazurra and Genc 2008) does not represent a challenge in emerging economy settings, characterised by weak host country infrastructures and institutional fields. These specifics pressure emerging economy firms to internationalise embarking on a quest of predominately valuable assets, as well as technological and managerial knowhow assisted by informal social networks (Yaprak et al. 2018). Gaining knowledge via learning from advanced economy markets, is not only a powerful motivator for emerging economy firms to internationalise in developed economy contexts, but also impacts the choice of entry modes of emerging economy firms in those contexts (Jonsson 2017).
Particular cases are the small and medium-sized enterprises (SME) of emerging economy firms in general and more importantly those from less developed countries. For example, a case study on a Ghanaian textile SME (Kujala and Törnroos 2018) implies that a combination of effectuation approach and networking may be necessary for the internationalisation of SMEs from emerging economies, especially the ones having severe resource constraints and lack of expertise in foreign operations. Research publications suggest that SMEs from emerging economies exhibit increasing international activities (e.g., Jormanainen and Koveshnikov 2012). Family firms often use their social contacts to speed up their internationalisation and compensate for lack of institutional support (e.g., Miller et al. 2009; Marinova and Marinov 2017).
Overall, research evidence shows that the internationalisation of emerging economy firms, regardless of size and other specifics exhibit substantial differences from the internationalisation patterns demonstrated by developed economy firms. Consequently, the purpose of this volume to address the current developments in the internationalisation of emerging economy firms is beneficial.
There are significant dissimilarities among various emerging economies due to variety of reasons such as historical and cultural diversities and geographical variabilities, to add also striking contrasts within these countries concerning super rich and extreme poverty (Leposky et al. 2016). As poor consumers make the majority of the markets of many emerging economies, research at the Bottom-of-the-Pyramid (BoP) has received growing attention since Prahalad (2004) coined the term and highlighted the vast, untapped market of people living below the poverty line, still representing a consumer base. In international business, the BoP markets are often regarded as recipients of aid. However, there is evidence that resource scarcity can be a source of innovativeness. Understanding the BoP market needs can be beneficial for emerging economy firms in meeting the needs of a huge part of the population in emerging market contexts (Simanis and Hart 2009). Consequently, it is important to consider the BoP market effect to understand how and why emerging economy firms internationalise and compete in markets with such characteristics.
Recent Developments of Emerging Economies and Their Firms
The World Economic Forum that took place in Davos in 2018 revealed that eighteen emerging economies worldwide had demonstrated consistent spectacular long-run macroeconomic indicators mostly in terms of per capita gross domestic product growth of above 3.5% per year over a 50-year or at least 5% per year over a 20-year period. These indicators had a positive impact on the economies of these countries simultaneously changing the fabrics of their home markets. Apart from China, Malaysia and South Korea these economies include the new fast advancing economies of India and Vietnam as well as Ethiopia and Uzbekistan.
The constantly increasing international competitiveness of the emerging economy firms originating from these countries have largely contributed to the above stated success. For example, by 2017 the Chinese phone manufacturer Transsion turned out to be the most important brand of smart and feature phones in the whole of Africa producing affordable handsets letting clients in African countries avoiding high cost when calling someone who uses a different mobile provider.
According to McKinsey Global Institute analysing the long-term performance growth of emerging economies and their firms emerging economies are a very influential locomotive securing growth for the world economy in the last fifty years. With China and India in the lead, all emerging economies brought practically two-thirds of the world’s GDP growth in the period 2002–2017. Nevertheless, the economic performance in the group of emerging economies differs extensively. Despite the fact that many such countries have achieved commanding and lasting long-term advancement, others have grown less powerfully and little by little (Woetzel et al. 2018).
The Chinese Perspective
China and Chinese multinationals are the most researched ...