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Part I
Introduction![]()
1
Introducing emerging market multinationals in Europe
Louis Brennan and Caner Bakir
Introduction
This introductory chapter sets out the evolving context of foreign direct investment flows within which the content of the book is positioned. It describes the collaborative process by which the research reported in the book was undertaken. The reasons as to why the research reported in the book is both timely and essential are outlined. In doing so, the critical conceptual, methodological, and empirical issues to be addressed in the book are derived. The aims of this edited volume are set out and the overall conceptual basis and methodology employed in the volume are presented. The chapter concludes with an explanation around the structure of the book and the topics covered.
The evolving context of foreign direct investment flows
The focus of this edited book is emerging market multinational companies (EMNCs, MNCs) in Europe. Traditionally FDI has flowed from advanced developed economies into developed and developing countries. More recently a new trend has emerged in the pattern of FDI. Outward-bound FDI from emerging economies has begun to increase significantly and has been growing at a faster pace than FDI from the advanced developed world. Unsurprisingly, the emergence of MNCs from emerging economies raises a wide range of challenges and opportunities for scholars, business professionals, and policymakers alike. Although explaining the rather sudden rise of these companies has become a major concern among scholars over the last few years, we have very limited knowledge on drivers, motivations, strategies, and impact of these EMNCs in Europe and their policy implications. This book is a very timely and highly stimulating contribution to the discourse on EMNCs as FDI in Europe from emerging countries, especially from the BRICs (Brazil, Russia, India, China), has grown to record highs in recent years.
The collaborative research process
This book is based on EU COST Action IS0905, which encompasses a twenty-six nation research network addressing EMNCs and their impact on Europe and its stakeholders. This four-year international and interdisciplinary research collaboration makes this book distinctive. The collaboration was thoughtfully conceived and nurtured productive enquiry in this underexplored area over the past four years. The contributors to this book have already participated in various academic activities such as workshops and conferences funded by EU COST Action IS0905 between 2010 and 2014. Thus, most of the authors have draft chapters emanating from these meetings and received feedback from the discussants and participants.
As a result, the book offers fresh theoretical and empirical insights, interdisciplinary and comparative perspectives with up-to-date data; it is informed by a broad spectrum of international scholars; and it is a coherent research project rather than a compilation of various weakly connected chapters on EMNCs in Europe.
The focus of the book
This edited volume examines the various aspects of EMNC investment in Europe. Characteristics of EMNCs; their drivers, motivations, and strategies; country-specific EMNC activities; and country and industry studies represent the four key areas addressed in the book. The chapters in these sections deal with theoretical, conceptual, and empirical aspects of EMNCs in Europe.
This book represents a novel and innovative contribution. The strength of the book is that it provides diverse perspectives on EMNCs from different disciplines, including business, economics, political science, development studies, and regional studies. It covers not only emerging investment patterns and profiles of EMNCs and their internationalization strategies in Europe, but also their sectoral, industrial, and investment policy-related impacts, so that the reader has deeper understanding of EMNCs from this collection. The book’s major contribution lies in providing fresh insights into EMNC activities and their impact in Europe. One of the central theses of this book is that EMNCs combine various country-specific advantages, existing firm-specific advantages (FSAs; exploitation), and/or new FSAs (exploration) in their market-seeking and resource-seeking FDI. There is considerable heterogeneity across EMNCs, even those from the same Southern economy. Further, there are also considerable country-level variations due in part to differences in local industry strengths and weaknesses, institutional environment, and government policy that affect patterns of outward FDI and behavior/motivations of MNCs. European FDI policies and their implementation should consider this divergent EMNC behavior across Europe. Thus, this book will fill a significant gap in the existing literature and serve to motivate further studies on the subject.
The major themes covered by the book are:
- Characterising and quantifying EMNCs in Europe.
- Drivers, motivations, and strategies of EMNCs in Europe.
- Country-specific EMNCs in Europe.
- Country and industry studies.
Internationalization of emerging-/developing-country multinationals (EMNCs) is part of the economic globalization process whereby EMNCs start to play an increasingly important role (UNCTAD 2006). The emergence of MNCs from emerging/developing economies raises a wide range of challenges for scholars, business professionals, and policymakers alike. Specifically, explaining the rather sudden rise of these companies has become a major concern among scholars over the last few years (Goldstein 2007; Ramamurti and Singh 2009; Sauvant et al. 2010; Brennan 2011; Panibratov 2012; Marinov and Marinova 2013; Williamson et al. 2013; Kumar 2015). However, there are considerable shortcomings in the previous literature on EMNCs. First, many are country-specific MNC studies (e.g., Chinese MNCs), ignoring comparative analysis and synthesis. Second, although FDI in Europe from emerging markets, especially the BRICs, reached a record high in 2013 (Ernst and Young 2014: 6), they do not fully take into account the geographical and sectoral distribution of these investments, and the motivations, strategies, patterns, and impacts of these EMNCs investing in Europe. By contrast this proposed volume addresses those considerations and sheds new light on the operations of EMNCs in Europe. It also serves to complement The Emergence of Southern Multinationals: Their Impact on Europe (Palgrave 2011), edited by Louis Brennan, as our book is current in terms of the quantification of EMNCs in Europe and the issues and challenges that arise from their growing presence in Europe.
The content of the book
Following this introductory section, the second section of the book offers a char-acterisation and quantification of EMNCs in Europe. The first chapter in this section, by Filip De Beule and Andreja Jaklič, provides an overview of Southern multinationals in Europe. The chapter offers a comparative overview of all Southern investments in Europe. The chapter compares the extent (number), sectors, business activities, and corporate parents of European subsidiaries from various Southern multinationals by analysing in detail the firm-level investments made in Europe. The second chapter in this section, by Andreja Jaklič and Filip De Beule, addresses the challenges of tracing EMNCs and FDI in European countries with consideration of the extent of data coverage and data deficiencies. The authors assess how the existing data coverage, data deficiencies, and changes influence data analysis and consider the policy implications.
The third section of the book, which contains four chapters, addresses the drivers, motivations, and strategies of EMNCs. The first chapter in the section, by Jagjit Singh Srai, considers the drivers and motivations of EMNCs into the EU. In particular, the author seeks to explore the drivers and motivations of EMNCs that have sought to establish a key element of their value chain within the European market. The second chapter in this section, by Sebastian Weusthoff and Reinhard Meckl, considers the motivations, success, and implications of mergers and acquisitions by EMNCs in developed countries with a specific focus on Europe. The third chapter, by Codruţa Dura and Imola Drigă, addresses the drivers, motivations, and strategies of EMNCs from Russia. The final chapter in this section, by Nükhet Vardar, focuses on Turkish EMNCs with investments in the EU and assesses the impact of their motivations on their degree of internationalization and performances.
Part IV of the book, which focuses on country-specific EMNCs in Europe, consists of four chapters. The first, by Françoise Hay, analyses Chinese investors in Europe and their idiosyncrasies. The second chapter, by Caner Bakir and Nuran Acur, looks at the trends, motivations, and strategies of Turkish MNCs’ green-field and acquisition investments. The chapter by Christian Milelli addresses the characteristics, competitive advantages, and strategies of Indian firms in Europe. The final chapter in this section, by Stefano Elia, Lucia Piscitello, and Vittoria G. Scalera, also considers Chinese MNCs and analyses, utilising a database of European subsidiaries of high-tech Chinese MNEs, the role of cultural and institutional distances on collaborative innovation within Chinese MNCs’ international networks in Europe.
The fifth section of the book incorporates country and industry studies. Per Heum and Armando J. Garcia Pires focus on Norway in the first chapter of this section and explore the question of investments from BRIC countries in in the context of Norway. The second chapter, by Michał Zdziarski, Jagjit Singh Srai, and Rasha Rezk, presents overview of network approach to internationalization, and its application to analysis of emerging versus established multinationals’ embeddedness in the global value chain of the white goods industry. The third chapter, by Marjan Svetličič, takes an industry perspective. The chapter explores the embeddedness of supply chains of emerging vs. developed market white goods MNCs in a global value chain. The fourth and final chapter in this section, by Michał Zdziarski, selects the BRIC countries that are increasingly active in global FDI flows and explore the patterns of investments among these countries and a group of Visegrad region countries in Central Europe.
The final section of the book provides a concluding chapter by Caner Bakir and Louis Brennan. It offers a summary and assessment of the main findings of the book.
Applicability of the book
This is a research book that is distinctive in that it is based on a four-year international research network (EU COST Action IS0905) and brings together scholars with diverse backgrounds from many countries. It is aimed at postgraduates, researchers, and academics, as well as managers and policy communities around the world having an interest in investments in Europe and the EU region and more generally in emerging market multinationals. Academic disciplines in which it would fit include international business, international relations, economics, economic geography, political science, and political economy. This book will have appeal for graduate courses in the fields of European integration studies, and European business programs. It will also be appealing not only to researchers, academics, managers, and policymakers in Europe but to those from emerging markets who have an interest in the European region. Since the contributors to this volume explore the emerging patterns of EMNC investments, internationalization strategies, and impacts in Europe, it will be attractive for academics teaching courses on international business and multinational corporations, the European economy, and FDI policy.
References
Brennan, L. ed. (2011). The Emergence of Southern Multinationals: Their Impact on Europe. London/New York: Palgrave Macmillan.
Ernst and Young (2014). EY’s Attractiveness Survey Europe 2014: Back in the Game. Available at www.ey.com/Publication/vwLUAssets/EY-2014-European-attractiveness-survey/$FILE/EY-2014-European-attractiveness-survey.pdf
Goldstein, A. (2007). Multinational Companies from Emerging Economies. London/New York: Palgrave Macmillan.
Kumar, N. (2015). India’s Emerging Multinationals. London: Routledge.
Marinov, M. and Marinova, S. (2013). Successes and Challenges of Emerging Economy Multinationals. London/New York: Palgrave Macmillan.
Panibratov, A. (2012). Russian Multinationals: From Regional Supremacy to Global Lead. London/New York: Routledge.
Ramamurti, R. and Singh, J. (2009). Emerging Multinationals in Emerging Markets. Cambridge: Cambridge University Press.
UNCTAD (2006). World Investment Report 2006. FDI from Developing and Transition Economies: Implications for Development. New York/Geneva: United Nations.
Williamson, P. J., Ramamurti, R., Fleury, A. and Fleury, M.T.L. (2013). The Competitive Advantage of Emerging Market Multinationals. Cambridge: Cambridge University Press.
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Part II
Characterizing and quantifying EMCs in Europe![]()
2
Southern multinationals in Europe
An overview
Filip De Beule and Andreja Jaklič
Introduction
Ten years ago, Battat and Aykut (2005: 4) asked the question of how Southern MNCs would affect the global economy: “Would we see major differences in strategies and behavior among Southern MNCs, and if so, would they be driven by nationalities, sectors, or other factors? Much of the growing effort of learning about this phenomenon has been to attempt to map it out – find out who is doing what, where, and test a few hypotheses here and there.”
They went on to say that “[t]his initial effort has been challenged by the lack of data. In general, complete and reliable inward FDI data from developing countries is hard to find, and even more so for their outward FDI. This new and growing phenomenon is bound to affect the economic development of […] countries, home and host to FDI. It is in the interest of those countries to learn more about it and deal with it, and for that they need to enhance their FDI data collection and management systems.”
Furthermore, Brennan (2010) indicated that the rise of Southern multinationals was an increasingly important phenomenon and that their impact on Europe deserved more research attention. He noted as one of the research implications the need to improve our knowledge of the phenomenon and its implications.
This chapter is an effort to try to answer these questions and shortcomings by analyzing a range of interesting data with regard to Southern multinationals and drawing inference from them. In particular, this chapter will give an overview of Southern multinationals in Europe. Most research either tackles Southern multinationals, or rather, multinational...
