Breaking the looking glass: Understanding how emerging market multinationals develop unique firm-specific advantages

Work on firm-specific advantages developed by emerging market multinationals largely focuses on their ability to copy those created by similar companies from the developed world. The predominance of new institutional economics in this field has limited our understanding of how these firms develop different firm-specific advantages by presuming not only that the institutional context in advanced industrialized countries is the best for creating such advantages, but also that local context does not shape the potential effectiveness of any such advantage. This article argues that comparative institutionalism better enables scholars to understand this phenomena. However, until now this theory has only examined how firm-specific advantages are derived from country-specific advantages. I argue that it needs to be revised so that it can account for how emerging market multinationals develop firm-specific advantages suited to emerging markets by building on their experience in addressing what this author terms location disadvantages. It illustrates this argument by examining how an Argentine Multilatina, IMPSA, was able to outperform its competitors from the developed world and become the leading producer of dams and windmill parks in Latin America by addressing location disadvantages in supplier markets.