A research agenda

Citation

Akbar, Y.H. (2006), "A research agenda", International Journal of Emerging Markets, Vol. 1 No. 1. https://doi.org/10.1108/ijoem.2006.30101aaa.001

A research agenda

About the Editor Yusaf H. Akbar is an Associate Professor of International Business at Southern New Hampshire University and Editor of the International Journal of Emerging Markets. He has held or currently holds Visiting Professorships at Universities throughout the world including Queen's University, Canada; Central European University, Budapest; Thunderbird, Europe; MIB School of Management, Trieste, Italy, KMBS-Kiev, Ukraine and University of Montenegro. His main research interests are in international trade and investment, EU integration and the politics of multinational enterprise strategy. He has published widely including two recent books, the first entitled EU Enlargement and Central Europe: Regulatory Convergence and the Multinational Enterprise (2003) and another volume, Global Antitrust: Trade and Competition Linkages (2003). He has published in peer-reviewed journals including Journal of World Business, Business and Politics, Global Governance, Thunderbird International Business Review, International Finance Review and World Competition

A research agenda

Launching a new journal is both an exciting and time-consuming phenomenon. For one thing, developing a compelling concept that appeals to fellow scholars, practitioners and libraries can be hard work. In deciding to launch IJoEM, I believe that Emerald will be creating new intellectual, conceptual and empirical spaces for people interested in emerging markets to showcase their work. The aim of IJoEM is to offer a conceptual and empirical survey of a range of issues in this important and growing area of academic enquiry.

The emerging markets are a heterogeneous group of economies and societies. Consequently, these emerging markets are an important testing ground for our existing theories, models and concepts of business and management. They also offer the opportunity for the development of new theoretical contributions in the field of management and business studies.

This brief opening article to the inaugural issue of IJoEM will be an attempt to set a research agenda for this area of enquiry. It will also touch upon some of the methodological and empirical challenges that researchers of emerging markets face when compared to analyzing more developed economies and industries.

Before we turn to a survey of issues for international business scholars in emerging markets, it is necessary to consider the central theme and its semantic and conceptual meaning.

The term “emerging market” has both promoters and detractors. For some, “emerging market” implies a positive outlook for the economic development of a country and that the economic performance of a country is converging on the average of the industrialized world. The most common measure of economic performance in this context include GDP per capita, unemployment, inflation and other similar macroeconomic aggregates. Another way of conceptualizing the convergence of emerging markets towards the industrialized world is by examining the intensity of and level of inward-FDI received by developing countries. In this way, we can also examine crucially the role played by multinational enterprises (MNEs) in the developing world. Indeed if the MNE is regarded as the “handmaiden” of economic development, countries that have opened their economies up to inward-FDI would clearly qualify as emerging markets. From the perspective of investors, the term is also positive in that implies the possibility of above-average returns in these markets when compared to industrialized economies.

Emerging markets are identified with structural changes in the infrastructure of their macroeconomic environment. They are also identified with those moving along their dynamic path from a closed economy with government control of economic policy to an open economy with reliance on market forces and on the market economy. The dynamic path leads to integration with the global economy, including trade, finance, and resource transfer (UNCTAD, 2003).

On the other hand, for critics of liberalization and globalization claim that the concept of emerging market bears the hallmarks of neo-colonialism. First, it can only “emerge” in the sense that its origins are created out of exploitation, and that closeness of economy was necessitated by the need for endogenous economic and technological development. Second, while it is possible for these markets to grow in size and prosper, they will only ever be replicating industrialized economy models of development at best and merely serving as low-cost transnational subcontractor locations of the MNEs based in the OECD countries at worst. Third, globalization will bring along (and necessitate) cultural convergence, which could lead to losses of traditional identities of these countries.

It is reasonable to argue that some aspects of both arguments hold true for future of developing countries that have international ambitions. First, it would be unrealistic to ignore the impact both positive and negative that colonialism and its aftermath have had on these countries and their attempts to develop economically. The nature of exploitation during the colonial era had a profound effect on the distribution of wealth and resources in these societies. Second, the impact of colonialism is not a sufficiently powerful determining factor as to rule out the possibility of economic success for developing countries since the underlying resource endowments of these societies are nevertheless promising and should act positively in their favor if they are exploited appropriately.

An important semantic of emerging market (as opposed to developing country) is that market operators perceive investment opportunities as cautiously optimistic. This is in sharp contrast to early decades in which the perception among the private investment community has been of regarding the developing world with severe caution. This was because private investors believed that governments in developing countries did not welcome foreign private investment and the perceptions of risk of nationalization and appropriation of foreign companies' assets was high. Today, the apparent failure of import substitution policies in the developing world and its replacement with outward-looking, open investment strategies is a clear break with the past for developing countries. Those countries that have adopted liberalization can also be clearly differentiated from a smaller number of developing countries that have resisted opening up their economies to foreign investment.

Current research issues in emerging markets

We can separate out our discussion of current research on emerging markets along the following dimensions. First we can draw a distinction between conceptual and empirical research into emerging markets. On a conceptual level, there are several areas of concern for scholars. One important research issue is the emerging market multinational enterprise (EMNE). Examples of such companies include well-established firms such as Samsung, LG (both from South Korea) and Cemex (Mexico) but also include new companies such as Haier Industries (China), Tata Group (India) and Petrobras and Embraer (Brazil) (see Khanna and Palepu (2004)). Since understanding the nature of the MNE is a central theme of international business scholarship, several conceptual questions arise from the experience of EMNEs: to what extent do our established theories of the MNE explain the development paths of EMNEs; how and in what ways do EMNEs face specific challenges when it comes to access to capital? Another conceptual issue relates to the role played by the transforming system of international economic governance and the prospects for EMNEs. More specifically, does a more highly integrated (and liberalized) world economy hinder or promote the economic chances for EMNEs?

Other conceptual research on emerging markets focuses on modeling risk in investment projects; developing conceptual frameworks for market entry strategies; managing government-business relationships given the political peculiarities of emerging markets and developing strategic frameworks for understanding appropriate configuration of the international value chain in emerging markets. On the empirical side, there are numerous avenues for research contributions in the field. These include a range of descriptive and prescriptive research strategies that cross and integrate most major disciplines in the field. Descriptive empirical research can include explaining inward-FDI patterns in emerging markets; comparative (case-study) research on marketing strategies in developing countries; measuring financial risk in emerging market bond issues; selecting and managing human resources in emerging markets. Prescriptive empirical research focuses on how to implement strategies in emerging markets; privatization and acquisition strategies for multinational enterprises.

Methodological and empirical challenges

Of particular note are methodological and empirical challenges when scholars undertake research focusing on emerging markets. One of the often-cited problems is a lack of quality data for the purposes of empirical analysis. This occurs on macro, industry and firm levels.

On a macro-level, official data from many of the world's developing countries is not consistent nor is the availability of that data reliable. Since many emerging markets have experienced significant system change – Central and East Europe as a case in point – the data that is available has undergone definitional changes and at best there is 15 years of consistent data available.

On an industry level, the market sizes of many emerging markets are sufficiently small that publicly available data is hard to find and proprietary data is expensive to acquire. Thus, scholars are forced to create their own data sets with all of the empirical and methodological challenges this entails.

Lastly, firm level data is even more challenging if the scholar is seeking to get systematic, multi-firm data. While writing case studies about individual firms has become considerably more do-able, we have yet to see large-scale firm level data sets used in emerging market research on a regular basis.

This should not therefore mean that scholars who examine emerging markets should avoid empirical research. Nor does is it imply that the review process for papers should not have the same level of critical rigor as for developed country/market research. But clearly, scholars of emerging markets should think carefully and honestly, at this stage, about the generalizability of their findings in emerging market research. Moreover, I believe it implies that there is an empirical building process at work and that IJoEM should contribute to this exercise.

Thus the papers selected for this inaugural issue represent a broad range of the emerging market research agenda. They also represent a broad multi-disciplinary sample of papers in the field of emerging market research. From areas ranging from China, Russia, India, Nigeria and Slovenia, we can see that the IJoEM project will be a multinational one. While it is clear that China (and increasingly India) will be the focus of much research in emerging markets, the myriad of other countries in the developing world need to be considered and examined.

Synthesis

Three key related issues for management and business in emerging markets are weak market institutions, the need for long-term orientation and the higher risks associated with developing countries. Existing western management practices and strategies may be inappropriate to deal with the specificities of emerging markets as amply demonstrated by several of our authors.

Culture also plays an important role in explaining business outcomes. Cultural distance between western managers and local managers in emerging markets may also lead to misunderstandings – especially when it comes to long-term versus short-term orientation.

Last but not least, there is a considerable amount for western managers to learn from the practices of firms based in emerging markets. Notably, the role of trust-based, relational management used by companies from places as far a field as China and Russia indicate that greater stability and business success can be achieved by western MNEs if they take a longer-term view. Scholars must continue to test well-established business and management concepts and theories in the emerging market field. By doing so, we will be able to confirm, refine and enhance our existing pantheon theories and approaches.

Yusaf H. AkbarSouthern New Hampshire University, Manchester, New Hampshire, USA

Further readingHooke, J.C. (2001), Emerging Markets: A Practical Guide for Corporations, Lenders and Investors, Wiley Finance, London.