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The Theory and Regulation of Emerging Market Multinational Enterprises

In: Foreign Direct Investments from Emerging Markets

Author

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  • Alan M. Rugman

Abstract

In this chapter, we use the logic of international business strategy to demonstrate that examples of worldwide integration are special cases that ignore the empirical realities of multinational enterprises (MNEs). In particular, simplistic thinking on globalization does not apply to MNEs from emerging markets. We briefly review empirical evidence that demonstrates that the world’s largest MNEs (including those from emerging markets) do not operate globally, but sell and produce the vast majority of their output within their home region of the triad. We develop an analytical framework which takes into account country-level and regional-level barriers to integration, and is useful in explaining the activities of MNEs from emerging markets. We explore the nature of the firm-specific advantages (FSAs) of emerging market MNEs but find that most of these firms rely on home country-specific advantages (CSAs) at this stage of their development. We finally apply this framework to issues in public policy toward foreign direct investment (FDI). We conclude that, from the viewpoint of international business strategy, prescriptive thinking is misleading if it is believed that MNEs from emerging markets can follow a global strategy of economic integration and assume market access to North American and European economies. Instead, MNEs from emerging markets need to develop strategies to accommodate the realities of intraregional integration and to overcome increasing host country regulations affecting inward FDI.

Suggested Citation

  • Alan M. Rugman, 2010. "The Theory and Regulation of Emerging Market Multinational Enterprises," Palgrave Macmillan Books, in: Karl P. Sauvant & Geraldine McAllister & Wolfgang A. Maschek (ed.), Foreign Direct Investments from Emerging Markets, chapter 0, pages 75-87, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-11202-5_5
    DOI: 10.1057/9780230112025_5
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    Citations

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    Cited by:

    1. Yan CHEN & Jie GAO & Yuqi CAO & Jialin GUAN, 2020. "Host Country Network Integration, Home Country Government Involvement, and Corporate Overseas Survival: Evidence from China," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 62-84, December.
    2. Ozkan, Kubilay S.L. & Khan, Huda & Deligonul, Seyda & Yeniyurt, Sengun & Gu, Qian (Cecilia) & Cavusgil, Erin & Xu, Shichun, 2022. "Race for market share gains: How emerging market and advanced economy MNEs perform in each other’s turf," Journal of Business Research, Elsevier, vol. 150(C), pages 208-222.
    3. Hermann Sebastian Dehnen & Jan H. van Dinther & Norbert Koubek, 2013. "From emerging economies toward the Emerging Triad," Schumpeter Discussion Papers SDP13008, Universitätsbibliothek Wuppertal, University Library.
    4. Driffield, Nigel & Du, Jun & Song, Meng, 2021. "Internationalization pathways of Chinese private firms: A closer look at firm-specific advantages," Journal of International Management, Elsevier, vol. 27(3).
    5. Li, Jing & Oh, Chang Hoon, 2016. "Research on emerging-market multinational enterprises: Extending Alan Rugman’s critical contributions," International Business Review, Elsevier, vol. 25(3), pages 776-784.
    6. Jiang Wei & Yang Yang & Sali Li, 2021. "Mirror or no mirror? Architectural design of cross-border integration of Chinese multinational enterprises," Asia Pacific Journal of Management, Springer, vol. 38(4), pages 1399-1430, December.
    7. Wenxin Guo & Joseph A. Clougherty, 2022. "Cross-border acquisition activity by Chinese multinationals and domestic-productivity upgrading," Asia Pacific Journal of Management, Springer, vol. 39(2), pages 659-695, June.
    8. Lei Guo & Marina Yue Zhang & Mark Dodgson & David Gann & Hong Cai, 2019. "Seizing windows of opportunity by using technology-building and market-seeking strategies in tandem: Huawei’s sustained catch-up in the global market," Asia Pacific Journal of Management, Springer, vol. 36(3), pages 849-879, September.

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