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Emerald Group Publishing Limited
Copyright © 2011, Emerald Group Publishing Limited
Article Type: Editorial From: International Journal of Emerging Markets, Volume 6, Issue 4
Below is a brief summary of the articles in this issue. In this issue, we have papers from four continents and coverage of all of the emerging market regions of the world. As ever, the papers come from a range of disciplinary perspectives too.
Our first paper aims to examine global brand perceptions in Pakistan: as the authors suggest – brand globalness (PBG) on consumers’ purchase intention (PI) and the mediating role of perceived brand quality (PBQ) and perceived brand prestige (PBP). The paper is an interesting one in that it extends the extant literature on the role of brand globalness into emerging markets where the choice problem between local and global brands is starker and in doing so demonstrating the moderating role of consumer ethnocentrism. Pakistan belongs to the so-called “Next 11” group of emerging markets and is therefore an important country to examine. The authors examined typical consumer non-durables (e.g. food and hygiene products) and conducted a survey among Pakistani consumers. Using an AMOS with a maximum likelihood (ML) estimation method, the authors found a significant relationship between PBG and PI through the mediation of quality and prestige. Nevertheless, highly ethnocentric consumers did not value PBG therefore suggesting that domestic industries may be able to compete against their more powerful global competitors.
Our second paper is a fascinating study on the strategies of multinational companies operating in Central and East Europe (CEE) during the recent global crisis. The CEE region was the most badly hit by the crisis because of its openness and its fragmentation, i.e. small, open economies. No published academic study to date has examined the level of multinational subsidiaries and subsidiaries’ responses to the global economic crisis. Empirical data for the study comes from secondary data, desk research and interviews – in this sense it is largely a “descriptive” methodology. The paper is rich in case study analysis by examining automotive, IT services and telecoms as examples of industries impacted by the crisis. Sergey Fillipov and Kalman Kalotay examine different typologies of subsidiary strategy and examine how the crisis impacted these strategies. The crisis has been particularly devastating to the CEE region because it has been caused by the coincidence of three processes: a cyclical downturn in the world economy; a structural change that hit certain industries which used to be significant employers of capital and labor in the global economy, especially the automotive sector and the collapse of the financial services industry. Subsidiaries in the CEE have adopted different strategies in response to the crisis including a reorganization of their production systems and a reduction or closure of activities that are deemed to be non-strategy critical.
The third paper in the issue is a study by a regular and valued contributor to International Journal of Emerging Markets (IJOEM) – Peter Enderwick. His paper examines an emerging industry in emerging markets: medical tourism (MT). Anecdotal evidence suggests that the internationalization of professional services into emerging markets has been rapid and relatively understudied in the extant literature. By examining four Asian countries: Thailand, Malaysia, Indonesia and Singapore, Enderwick poses both positive and normative questions. On the descriptive side, he analyzes the factors that drive success in the MT sector. On the normative side, he considers whether this industry is good for the development of these economies and what the public policy implications are. He concludes that in the Asian emerging markets considered in the paper, they are all enjoying strong growth in the area of MT. Much of this growth may be understated and in particular, may be overlooked by healthcare providers in developed markets. Second, currently the sources of the competitive advantage of MT providers in emerging markets are low-cost locations and inputs and very little evidence of niche positioning. Third, the long-term future of MT is not obvious. MT may represent a transitional phase between the formerly closed healthcare systems of the last century and a future of a fully globalised medical system provided at low cost anywhere in the world.
Paper four by Sumati Varma evaluates born global IT firms from India. This paper fills an empirical gap in the literature on born globals: almost all studies undertaken on this phenomenon have been in the context of developed countries. There is no study on the phenomenon in the Indian context – this paper seeks to fill that gap and initiate further discussion. Given the exploratory nature of the paper, the case study method was used as the core research strategy. The data for this study are taken from M&A activity of the Indian IT industry during January 2001 to March 2007. It used secondary reported firm-level data from studies by consulting firms such as UBS, Accenture and MAPE, as well as “Prowess”. In the period 2000-2007, there were over 500 overseas acquisitions from India out of which 133 (25.5 percent) were from the IT sector carried out by nearly 50 companies. These born global acquirers are in the words of the author “heartening” since it offers hope that emerging market multinationals can compete in M&A with developed country companies. In relative terms, born globals might be seen to herald a more diverse international business actor. Future research should aim at deepening understanding of early adopters of internationalization, which represent a widespread, ongoing trend.
Our fifth paper examines the dynamic situation in Cuba – the first time IJOEM has published a paper on this influential Caribbean Island. Given the changes in leadership in Cuba, and in particular the emergence of Fidel Castro’s brother Raul, Cuba seems to be embarked on a progressive liberalization of the economy. In particular, de-nationalization seems to be central to this process. Our authors, Marilyn M. Helms and Richard C. Becherer, ask whether entrepreneurship be the key source for the improvement and future development of Cuba’s economy. Using Graham’s framework of conditions necessary for encouraging entrepreneurship, Cuba is analyzed based on field research by the authors after a July 2010 state department sanctioned research trip to observe entrepreneurship in the hitherto-centralized economy. Cuba is an under researched country in the English language literature and it is interesting to examine a small economy (as opposed to China) trying to move immediately from communism to capitalism when their economy is in crisis while avoiding a revolution and system change. In their field research, the authors uncover typical problems of planned economies – gross inefficiency, bureaucratic bottlenecks, etc. What is perhaps controversial to some is that they call for the lifting on the US embargo currently in force against Cuba.
Our final paper for this issue from C. Samuel Craig and Susan P. Douglas examines rural poverty in emerging markets. Rural consumers in emerging market countries are among the largest and fastest growing segments of the world’s population. This study evaluates marketing’s role in serving potential in these areas and proposes how companies can support consumers in the development of their purchasing power, thus creating a sustainable process that provides gains to both consumers and companies. The paper’s empirical contribution is based on desk research of multinational company web sites and interviews with consumers in rural areas. The core conclusion is that marketing strategy in rural emerging markets must be developed from scratch. In particular it must be grounded in a nuanced and thorough understanding of consumers, especially in their roles as co-producers. Second, companies need to develop ways to empower consumers through integrating them into the value chain. Third, since distribution is a key feature of the marketing mix, companies must invest considerable time focusing on infrastructure development and expanding distribution to ensure product availability.
Yusaf H. Akbar