Internationalization of Emerging
Market Firms
Vikas Kumar
Discipline of International Business
University of Sydney
MNCs from Emerging Economies
University of Melbourne
24-25 September, 2009
Emerging Markets – A Heterogeneous Group
(Goldman Sachs study 2003)
Internationalizing Emerging Market Firms
– Heterogeneous?
YES!
Government Intervention
Ownership Advantages
High OR Low
Industry Level
High OR Low
Firm Level
International
Strategy
Institutional Reforms
High or Low
Country Level
Ownership Advantages:
Market and Non-market based
•
•
•
•
•
•
Natural Factor Endowment
Large Pools of Human Talent
Government Support
Business and Social Networks
Experience of Operating in Harsh Conditions
Political Capital – effective lobbying ability
Are non-market based advantages transferable?
Government Intervention
Performance of Internationalizing Indian Firms
Contractor, Kumar & Kundu JWB 2007
Performance
Figure 1
Manufacturing
Services
40
35
30
25
20
15
10
5
0
0
20
40
60
80
100
120
M or DOI
Performance of Indian Pharma Firms
Kumar & Singh TIBR 2008
Institutional Reforms
Performance of Group Affiliated Firms
Zattoni, Pedersen, & Kumar CGIR 2009; Gaur & Kumar BJM 2009
Early Phase (90’-95’)
Late Phase (96’-06’)
BG
Pvt.
+
-
-
+
Performance(ROS)
15
13
11
9
7
5
3
5%
15%
25%
35%
45%
55%
65%
75%
85%
95%
Degree of Internationalization
(Foreign Sales to Total Sales)
Unaffiliated
Affiliated
Business Group benefits tend to atrophy
Typology
High Institutional Reforms
H
Enersis
Samsung
Acer
Ownership
Adv
Li &
Fung
Gener
MTN Wireless
Hyundai
Weak to
Internationalize
L
L
Government Intervention
H
Typology
Low Institutional Reforms
Suzlon
Infosys
H
Ranbaxy
Wipro
Dr. Reddy’s
TCS
Ownership
Adv
Tata
Motors
Jollibee
Foods
Cemex
Lenovo
Haier
ICBC
Tata Steel
Mabe
CITIC
CNPC
L
L
Government Intervention
H
Internationalization Path/Motive
Market Seeking
Efficiency Seeking
H
Developed
Markets
Emerging
Markets
Ownership
Adv
Emerging
Markets
Developed
Markets
Asset Seeking
Resource Seeking
L
L
Government Intervention
H
How successful will Internationalization of
Emerging Market Firms be?