Marketing strategies of MNCs from emerging markets: internationalisation and market entry mode

Citation

Mellahi, K., Demirbag, M., Tamer Cavusgil, S. and Danis, W. (2010), "Marketing strategies of MNCs from emerging markets: internationalisation and market entry mode", International Marketing Review, Vol. 27 No. 3. https://doi.org/10.1108/imr.2010.03627caa.001

Marketing strategies of MNCs from emerging markets: internationalisation and market entry mode

Article Type: Guest editorial From: International Marketing Review, Volume 27, Issue 3

This is an introduction to Part 2 of a double special issue on marketing strategies of multinational corporations (MNCs) from emerging markets (EM). Part 1 was published in the previous issue of International Marketing Review (27(2)). It focused on marketing strategies of emerging markets multinational corporations (EM-MNCs). This part focuses on international strategies and location decisions of EM-MNCs seeking markets in developed and developing countries.

Since the beginning of international business and international marketing research, internationalisation and market entry mode has attracted considerable research attention. Several theories from this research have been developed to explain why, when and how MNCs internationalize their activities. Well-established theories including Caves’ (1982) theory of monopolistic advantage, Vernon’s (1966) international product cycle theory, Johanson and Vahlne’s (1977) stage theory, Dunning’s (1988) eclectic OLI paradigm, and recent theories such as born global (Knight and Cavusgil, 1996) have sought to explain when and how MNCs expand their activities outside their home market. Also, a large volume of research on entry modes has explored the form of operations MNCs use to enter foreign markets (for an extensive review see Brouthers and Hennart, 2007). However, most of the research on internationalization processes and entry mode has so far focused upon traditional multinationals from developed countries. Thus, there is insufficient knowledge about the internationalization and entry modes of EM-MNCs. The small, but growing body of research on internationalization of EM-MNCs (Aulakh, 2007; Buckley et al., 2007; Dunning et al., 2008; Deng, 2009; Duysters et al., 2009; Kumar, 2007; Luo and Tung, 2007 and Mathews, 2006) show that there are major differences between traditional MNCs and EM-MNCs both in the methods and motives of internationalization. Further, there remains considerable debate surrounding appropriate EM-MNCs modes of entry (Demirbag et al., 2009). This special issue aims to further our understanding of market entry modes and location choices by EM-MNCs.

Papers in this part of the special issue focus on two key themes. The first theme is location choices by EM-MNCs. The second theme is internationalisation and market entry modes of EM-MNCs.

The first group of papers seeks to identify the unique factors that determine location choices of EM-MNCs. The first paper is by Mehmet Demirbag, Ekrem Tatoglu, and Keith W. Glaister. The paper focuses on critical factors affecting location choices of 522 Turkish MNCs in developed and developing countries. This paper reports that the level of political constraints, the level of knowledge infrastructure in the host country market, subsidiary density, industry R&D intensity, and subsidiary size have an impact on the Turkish MNC’s location choices. This study of Turkish MNCs provides an important contribution to our understanding of EM-MNCs location choice behavior as these firms operate both in resource rich countries of Russia, Central Asia, and the Middle East as well as emerging and developed countries of Europe. It focuses on key regional characteristics that lead EM-MNCs to select particular locations for their operations. The main argument developed in this paper complements recent theoretical perspectives developed for internationalization of EM-MNCs. Demirbag and colleagues argue that Turkish MNCs have a motive of strategic asset seeking to enhance their global competitiveness when they enter developed countries, whereas they simply attempt to exploit their firm-specific advantages or competencies when they access emerging countries.

The second paper on the location choice theme is by Lin Yuan and Nitin Pangarkar. This paper is based on ecology and institutional theories. Based on a database of 204 Chinese firms’ location choice decisions between 1992 and 2005, the paper examines sample firms’ own past choices (behavioral inertia) and rivals’ past choices (behavioral mimicry) as key determinants of location selection. Lin Yuan and Nitin Pangarkar report that behavioral inertia has a stronger impact on the location decisions of Chinese MNCs than behavioral mimicry. They also found that host country institutions moderate relationship between behavioral inertia and mimicry. The paper makes a significant contribution by examining host country institutions’ impact on EM-MNCs location choice decision. In doing so, the paper also highlights differences between EM-MNCs and developed country MNCs and their implications for the relative influence of mimetic versus inertial forces.

The second group of papers in this part of the special issue focuses on internationalization and market entry strategies of EM-MNCs. The first paper focusing on this theme is by Eren-Erdogmus and colleagues, who examine internationalization processes of retailing firms from emerging countries. This is an exploratory study of Turkish retail firms in the textile and ready-to-wear industry. The authors adopted a case study approach to examine internal drivers, home and host country characteristics’ impacts on the internationalization processes of retail firms from an emerging country. Based on their case study findings, the authors propose an internationalization model for EM-MNCs in the retail industry. The proposed model of internationalization processes for Turkish retail firms provides a foundation for building theory in this quite new area of research.

The second paper on the same theme is by Chao, Lo, and Yu. Chao and colleagues study 819 Taiwanese firms’ operations in China. The paper examines the impact of three sets of factors (transaction cost related, resource related, and institutional environment related) on EM-MNCs’ market entry strategies. While Taiwan and China share the same geography and similar cultural values, there are perceived differences that seem to affect managers’ entry mode decisions. These differences are not only related to resource endowments and transaction costs, but also the institutional environment also plays a8 significant role in shaping executives’ perceptions. Chao and colleagues report that perceived institutional differences have a moderating effect on market entry mode decisions. This paper, by adopting dimensions from different perspectives, enhances our knowledge of EM-MNCs market entry decisions to enter other emerging markets.

Xiaohua Lin’s paper is the third paper on internationalization and market entry mode of EM-MNCs. This paper conceptualizes EM-MNCs from a different perspective. Lin develops a conceptual model of internationalization of both private and state-owned Chinese MNCs, which fills an important gap in the literature. The author argues that these two types of Chinese MNCs are dissimilar in terms of internationalization motives, resources, flexibility, and adaptability to a new environment. This paper offers an initial conceptualization and four testable propositions by synthesizing existing theories and taking into consideration some conditions unique to China. While there have been a number of conceptual frameworks on equity ownership and entry mode of Western MNCs, this paper argues that private Chinese MNCs come from a background different from their state-owned enterprise counterparts and display rather different strategies and behaviours. The author makes use of various case studies to develop a number of arguments. The focus of discussions developed in this paper is on equity ownership strategies of private and state-owned Chinese MNCs. Xiaohua Lin argues that descriptions of latecomer MNCs emerging from the Asia-Pacific region is more applicable to Chinese private MNCs than to Chinese state-owned MNCs. Private Chinese MNCs are more flexible and quick to adapt but also less exposed to the kind of liabilities of foreignness typically associated with state-owned MNCs. Compared to state-owned Chinese MNCs, private Chinese MNCs are relatively invisible due to their small size, perhaps also due to their low-profile strategies, but these firms have developed some unique skills, which make them very competitive and innovative in the global marketplace.

Acknowledgements

The Guest Editors thank the Editors of International Marketing Reviews, John Cadogan and Jeryl Whitelock, for providing them with the opportunity, support and encouragement to edit this two-part special issue. Also, the Guest Editors offer their sincere gratitude to the reviewers for all their help and advice with regard to the submitted papers (see Appendix). Last, but not least, they thank all the authors who submitted their work for consideration in the special issue.

Appendix. List of reviewers for the special issue

Remzi Altunisik, Sakarya UniversityMarina Apaydin, The American University in CairoErkan Bayraktar, Bahcesehir UniversityMuzaffer Bodur, Bogazici UniversityTamer Cavusgil, Georgia State UniversityAlvaro Cuervo-Cazurra, University of South CarolinaTevfik Dalgic, University of Texas at DallasWade Danis, Georgia State UniversityDilek Demirbas, Northumbria UniversitySerdar Durmusoglu, University of DaytonAsim Erdilek, Case Western Reserve UniversityMark Fetscherin, Rollins CollegeAxele Giroud, University of ManchesterEmanuel Gomez, Coventry UniversityTalha Harcar, Penn State UniversityMatthew Hughes, University of NottinghamSylvie Laforet, University of SheffieldShige Makino, Chinese University of Hong KongSvetla Marinova, University of BirminghamMaktoba Omar, Napier UniversityDaragh O’Reilly, University of SheffieldOlga Petricevic, Georgia State UniversityFotios Posiouras, University of BathKeyoor Purani, Indian Institute of Management, KozhikodeSuzana Rodrigues, Erasmus UniversitySunil Sahadev, University of SheffieldSteven Seggie, Ozyegin UniversitySelime Sezgin, Bahcesehir UniversityPauray Shukla, University of BrightonAnne Souchan, Loughborough UniversityBurcu Tasoluk, Sabanci UniversityEkrem Tatoglu, Bahcesehir UniversityYinqqi Wei, University of York,Heidi Winklhofer, University of NottinghamDeli Yang, University of BradfordAttila Yaprak, Wayne State UniversitySengin Yeniyurt, Rutgers UniversitySelim Zaim, Fatih UniversityYushan Zhao, University of Wisconsin-Whitewater

Kamel Mellahi, Mehmet Demirbag, S. Tamer Cavusgil, Wade DanisGuest Editors