Globalization, the Multinational Firm, and Emerging Economies: Volume 10

Globalization, the multinational firm, and emerging economies have marked the world economic landscape during the last two decades. They will likely continue to define international economic activity in the foreseeable future. This opening piece of the conference on globalization, the multinational firm, and emerging economies helps frame these concepts in today's economic landscape. It explores the impact globalization and the multinational firm have had, and will continue to have, on the emergence of newly industrializing economies onto the world scene and critically evaluates policy options typically followed by these economies to arrive at sustainable economic progress. It concludes with recommendations for future explorations of the interplay of globalization, the multinational firm, and economic emergence.

As economic transformation swept the world in the last two decades, interest in providing theoretical explanations to economic emergence grew simultaneously. While scholars focused mostly on national development strategies such as import substitution and export promotion, little effort has so far been made to better understand firm behavior, particularly motives and strategies at the micro level. This chapter focuses on understanding the motives and marketing strategies of foreign firms operating in the emerging markets of Central and Eastern Europe. On the basis of data gathered from fieldwork in Bulgaria, Hungary, Poland, and Slovenia as part of a major two-year project, the chapter offers insights into why firms might invest in these economies, how they might interact with host governments, what strategic priorities they might follow, how they might approach markets and why, and what competitive battles they might engage in to succeed in these markets. The chapter concludes with suggestions for future research.

A survey of selected theories relevant to foreign direct investment abroad is the basis for predicting when outward FDI from more developed Central European Countries begins. Slovenian experiences are used as case studies. Although inward FDI is still dominant, outward FDI is picking up in terms of sales operations in developed countries, but also as manufacturing units in other Central European countries. It is argued that outward investment can promote the restructuring of traditional industries. Outward FDI is starting today at an earlier stage of development, not only as a result of the accumulation of firm-specific advantages, but also from a position of weakness in order to learn from abroad and to strengthen competitive advantages. Outward FDI enhances the process of restructuring where such internationalisation is synchronised with the loss of comparative advantages of home countries. The case of Slovenia is evaluated in terms of geographical allocation of such investments, sectoral distribution and dynamic changes.

This chapter argues for the relative importance of marketing institutions in stimulating economic development in emerging (‘developing’ or ‘transition’) economies. Furthermore, it argues that in situations where marketing institutions are allowed to freely operate, the particular institutions that are most important will depend on the stage of economic development. To illustrate, this paper develops an historical framework for understanding marketing development, providing a body of theory that will help society interpret current marketing events and prepare future managers and/or government policy makers to address the changing needs of the marketplace as economies develop. It then discusses the theory behind this framework and suggests a number of public policy implications for emerging economies.

A perplexing problem that has challenged emerging economies in their quest for sustainable economic development has centered around their ability in coping with currency crises. This chapter explores how emerging economies in parts of Asia and Latin America have learned to cope and in some cases overcome the problems associated with rapid growth on the one hand and foreign exchange difficulties on the other. The authors explain the Asian financial crisis of the late nineties through fundamental breakdowns in economic principles, the failure of the much admired East Asian miracle under Asian circumstances, and the instability introduced to the Asian environment through rapid, short term, quickreturn-seeking capital flows.

Performance of the multinational firm in the special conditions of emerging market economies has become a critical issue in business research. This is because the special conditions of these economies, such as dynamism coupled with uncertainty, rapid change in the structures of firms and economic institutions along with firm and government inertia, and spells of economic growth often simultaneous with phases of deterioration, have all made the measurement of firm performance next to impossible. This chapter develops a conceptual framework and measures that might be used in such performance assessment. It also reports findings from research conducted on multinational companies operating in Turkey. These findings indicate interesting conceptual and managerial implications about competitive marketing, organizational values, and strategy formulation in emerging economy contexts such as Turkey.

The study reported here aims to determine the current status of Turkish clothing exporters in terms of organizational/attitudinal characteristics and marketing mix policies as well as to evaluate the problems, expectations and perceptions related to some situational aspects. Another main aim of this study is to determine the characteristics related to the export performance of the firms exporting to the EU. The results of the study give important insights into the strengths and weaknesses of the Turkish clothing exporters in EU markets. This study also presents findings, which give direction to the policies of the Turkish government, industrial associations and related public institutions for the Turkish textile and clothing industry, the sector of the Turkish economy that is most affected by the Customs Union.

The formation of international joint ventures has taken place at an unprecedented rate over the last two decades. Particularly within the context of developing nations, joint ventures have been predominantly preferred by multinationals over other types of strategic alliances. This article seeks to contribute to the comparative analysis of international joint ventures, including firms from developing countries, by conducting a detailed examination of the joint ventures established in Turkey during the 1990s. Particular focus is given on the structure, the reasons for venture formation, and the performance characteristics of these joint ventures. An analysis of foreign capital flows and joint ventures based on secondary research is coupled with an empirical analysis of 34 manufacturing joint ventures in Turkey. The findings are compared to previous studies of joint ventures in other developed and developing market economies.

The internalizing decision of export operations inside the firm, with respect to their maintenance in the domain of the market through several mechanisms of external distribution, is examined with data coming from a general sample of 428 Catalan and 1,836 Spanish (non-Catalan) exporters. An interpretive framework for explaining the channel integration decision is designed and tested by means of a logistic regression model. Results seem to confirm, first, a higher relative proportion of firms which externalize their export activities in the market — versus internalize — in both groups and, more interestingly, a higher degree of internalization among Catalan industrial exporters versus the non-Catalan ones. Secondly, some hypotheses related to the selection of the optimal level of channel integration in the international context are also confirmed, though some differences emerge between these two groups of exporters. Finally, several conclusions are derived from the analysis.

This paper examines the characteristics of the so called Born Globals and compares them with other types of exporting companies. Born Globals are defined as firms that were established after 1976 and have reached a share of foreign sales of at least 25% after having started export activities within three years after their birth. A total of 272 Danish exporting, manufacturing companies are analyzed out of which 47 can be categorized as Born Globals according to these criteria. The contribution of the paper is empirical and descriptive; the literature has not yet shown a large scale study with similar comparisons. As shown below, Born Globals have a distinctive profile: they have a high share of foreign sales (almost 70%) and resemble the most internationally oriented exporters with respect to internal capabilities and competitive platform (specialized production) as well as their geographical scope. However, because of their small size and limited resources they often operate at arm's length in foreign markets, sometimes even more so than very inexperienced exporters.

This chapter proposes a preliminary evolutionary model of the internationalisation of the small firm which includes consideration of the emergence of an internationalisation culture in this firm. Dynamism in the model is represented by the simultaneity of the interaction between the firm's commitment to the market, its knowledge of the market and its involvement in the market. The overlap and intersection between these constructs reflects an evolving internationalisation culture and represents the degree of internationalisation of the firm. Preliminary case evidence from Australia, and its analysis, offers limited support for the proposed evolutionary model.

Investing in emerging economies has become very popular as a result of globalization of markets and competition. Among these, the countries in East and Southeast Asia have become very popular investment sites. This chapter explores the promise and potential problems associated with one Southeast Asian emerging market, Vietnam, and presents a survey-based study of Singaporean companies involved in the Vietnamese market. This study helps us understand why foreign firms might view Vietnam as an attractive investment site and describes the keys to success in operating in the Vietnamese market.

The rapid transition of the Chinese economic system from centrally planned to market mechanisms created a new market structure and changed the ways in which business had been conducted in China. Among these changes is the transformation in the marketing environment, which has introduced fragmentation and uncertainty and increased the complexity of operations. This chapter discusses the effectiveness of five Belgian joint ventures in China's fragmented environment and demonstrates the contributions they have made in terms of knowledge transfer and organizational learning, particularly in terms of formulating and managing local marketing strategies.

Learning organizations and market orientation are at the center of attention in the 1990s. Many businesses encounter cutthroat competition and operate in a turbulent, international and complex environment. To keep the business going which makes a sound profit is often a difficult challenge. Management theorists and consultants as well as marketing researchers have found these seemingly different concepts from two different disciplines of management as medicines for competition problems. This chapter tries to link these concepts in an empirical study investigating Dutch exporters. The Dutch experiment shows that there is a correlation between learning organizations, market orientation and business performance.

Increasing numbers of small and medium sized firms (SMEs) are becoming active in international business. This phenomenon is being facilitated by numerous trends in the macro-environment of the firm. However, SMEs are typically quite resource-constrained relative to their larger, traditional rivals. Many SMEs fail to bridge the gap between initial exporting efforts and ultimate success abroad. We propose a number of programs that governments can implement to help SMEs in overcoming the initial, challenging period of internationalization.