“Punching above their weight”: The sources of competitive advantage for emerging market multinationals

Abstract

Purpose

The purpose of this paper is to comprehensively review the sources of competitive strength of emerging market multinationals (EMMs). Since most lack firm-specific assets such as internalized knowledge or globally recognized brands, especially in their early international growth, and emanate from less-developed nations, the success of EMMs has to be explained by identifying factors in their home nations and international scope which make these firms internationally competitive.

Design/methodology/approach

A comprehensive review of the extant literature and company cases identified several sources of competitive advantage for emerging market firms. Since conclusive evidence is still unavailable, many of these factors are proposed as hypotheses for future empirical research. Where needed, contrary viewpoints are also discussed and cited.

Findings

This paper identifies several possible location-specific assets of emerging market companies including the mindset of top management of EMMs (such as long term orientation, global or cosmopolitan perspectives, a degree of humility that recognizes the need to catch-up by learning from foreign allies and customers, tolerance for ambiguity, and frugality) and home country cultural traits such as emphasis on relationships, family control, and private equity capital. Other sources of competitiveness may lie in the home country pool of technical talent and cheap labor, the extensive diasporas of persons of Chinese, Indian and Brazilian origin, and the role of common language as determinants for the geographical pattern of FDI from emerging nations.

Originality/value

This paper serves the dual purpose of providing a comprehensive literature review of this topic for doctoral or Masters students, and specifying hypotheses (as well as opposing views) for further investigation.

Citation

J. Contractor, F. (2013), "“Punching above their weight”: The sources of competitive advantage for emerging market multinationals", International Journal of Emerging Markets, Vol. 8 No. 4, pp. 304-328. https://doi.org/10.1108/IJoEM-06-2013-0102