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There is an increased interest in research and explanation for emerging markets and multinational corporations (MNCs). This paper aims to study emerging markets and MNCs.
The paper takes help of existing literature and industry examples.
The success record of MNCs from developed countries in emerging market has been mixed. The MNCs from emerging markets are now expanding and acquiring companies in developed countries at a rapid pace in recent years. This is reflected in the increasing number of emerging markets MNCs in the Fortune Global 500 list. Emerging market MNCs are giving tough competition to developed country MNCs in other emerging markets as well as Third World countries. The emerging market MNCs' power and impact has increased significantly and many of them have become household names across the world.
MNCs play a very important role in global business. Multinationals and emerging markets have become a popular subject of research.
MNCs from developed countries need to understand emerging markets better. Emerging markets multinationals need to learn further in conquest for global markets.
This paper looks at various issues involved in multinationals and emerging markets.
This study examines the fund‐level correlates of return and share price discount or premium for the closed end funds (CEFs) investing in emerging and developed capital…
This study examines the fund‐level correlates of return and share price discount or premium for the closed end funds (CEFs) investing in emerging and developed capital markets. It also compares the performance of CEFs investing in emerging markets with similar types of funds that invested in the developed markets, especially significant in light of recent economic crises experienced by a number of such emerging economies and their ripple (contagion) effects felt in other emerging or developed capital markets. Lastly, as emerging markets constitute a wide array of countries with very different economic records, this paper looks into the performance of emerging markets CEFs by region as well as the performance of single‐country versus regional funds. Findings confirmed results of many studies of domestic and international open‐ or closed‐end funds on determinants of return and share price discount or premium. Emerging capital markets also continued to provide an outlet for international investors to improve their portfolio return despite significant volatility that surrounded them during the study period. Lastly, this study did not find any compelling evidence for consistent superior performance by CEFs investing in any particular region or country within the emerging markets.
Emerging markets present differences in structural characteristics, yet exhibit commonalities of melancholy evidence of varying degrees of economic and political…
Emerging markets present differences in structural characteristics, yet exhibit commonalities of melancholy evidence of varying degrees of economic and political under‐development. There is a greater consensus in the finance literature on what the characteristics of emerging markets are than there is on their meaning. Some perceive the financial markets in terms of the mix of financial institutions and the level of development of the national economy. In this respect, popular reference relates to the dichotomy between developed and developing countries. This view of the emerging markets is flawed on the grounds that some countries within the developed countries' group are regarded as emerging markets (e.g. Portugal, Greece and former USSR) (see for example, Todaro, 1989, p.16). Narrow conceptions then focus on the level of development (and efficiency) of the national stock market and financial system, hence the appellation ‘emerging stock markets of developing countries’. These markets are thought to suffer from the small numbers market condition (Williamson, 1975), allocative efficiency distortion, and a range of market imperfections and externalities, including transaction costs. Yet others cast these markets in terms of their high levels of political risk, involving essentially military interregnums or what the international investor regards as unwarranted government intervention in exchange transactions.
Store brands, which were once only found on the shelves of developed countries, are now being introduced in emerging markets in increasing amounts. The purpose of this…
Store brands, which were once only found on the shelves of developed countries, are now being introduced in emerging markets in increasing amounts. The purpose of this paper is to describe the store brand process as it is found in emerging markets. In doing so, the authors explain what are the forces that have led to the development of store brands in emerging markets and the sort of strategies that should be implemented.
The paper provides comparative statistics showing the penetration of store brands in both developed and emerging markets. Then, the conditions that determine whether store brands should be adopted by retailers are identified and discussed.
Five key factors have been identified that explain successful management approaches to introducing store brands in developed as compared to emerging markets. These include the number of store brand categories available, the quality of store brands, type of products, the manufacturers of the products and the number of product lines sold by retailers. Finally, the paper discusses the future of store brands in emerging markets and predicts that their penetration will closely follow the trend in developed countries.
This paper provides insights into what sort of strategies should be used by store managers in emerging markets to adopt store brands in order to satisfy the income levels of many of their customers. The use of store brands will not only provide more consumer satisfaction, but increased profits for the store.
In emerging markets, Internet marketers need to pursue strategies that are different from those in developed countries. The four major considerations that guide Internet…
In emerging markets, Internet marketers need to pursue strategies that are different from those in developed countries. The four major considerations that guide Internet marketers in emerging markets are technology, marketing functions, target markets, and the marketing mix. This paper analyzes these four issues and develops appropriate strategic propositions for Internet marketers in emerging markets. Upon recognizing the technology‐related constraints in emerging markets, marketers are advised to use the Internet more for informational rather than transactional or product‐delivery purposes, and focus on business customers and affluent consumers. Propositions are made regarding the appropriate product, promotion, pricing, and distribution strategies to reach these target markets in emerging economies by using the Internet.
This paper analyzes the special character of currency risks associated with equity investments in emerging capital markets. Such investments are an important and growing…
This paper analyzes the special character of currency risks associated with equity investments in emerging capital markets. Such investments are an important and growing source of funds for financing projects which contribute to the rapid pace of growth in emerging markets. While investors in any foreign market face the consequences of possible changes in the value of foreign currency, uncertainty about the terms for currency conversion in emerging markets are aggravated by the interaction of capital flows and currency values, particularly for countries which rely heavily on external sources of financing. In such an environment, it is essential for investors to understand the characteristics of currency risk in order to incorporate them in their investment decisions. This paper analyzes equity market returns and currency fluctuations in a group of emerging markets by comparing them to a set of developed countries. By traditional measures of risk emerging markets appear to have low levels of currency risk. This paper demonstrates that there has also been substantial changes in currency risk in emerging markets which have not occurred in developed markets. This paper also discusses methods of hedging currency risk, taking into account the limitations on hedging strategies in emerging markets and the special characteristics of currency risks in those markets.
Purpose – This study examines country-level attributes that impact on Corporate Governance Disclosure (CGD) depending on the emerging market country's legal system.…
Purpose – This study examines country-level attributes that impact on Corporate Governance Disclosure (CGD) depending on the emerging market country's legal system.
Methodology/approach – We evaluate CGD level using 749 annual reports (year ended 2006) in 57 emerging market countries. We develop a CGD determinants model that compares differences in country level attributes between common law and civil law emerging market countries. Our model builds on a multiple regression and assumes interaction between the origin of the legal system and country-specific attributes.
Findings – Common law emerging markets have substantially higher levels of CGD than civil law ones. CGD is positively associated with the size of the capital market for the entire sample of emerging markets and for the sub-samples of common law and civil law countries. Law enforcement also has a strong positive influence on CGD in common law emerging countries, whereas it has no influence on CGD in civil law emerging countries.
Practical implications – Providing CGD levels for emerging markets helps to a better understanding of the corporate governance characteristics that prevail in each country. Decision makers (international investors, market authorities, standard setters, etc.) should be aware of how country level attributes may interact with the legal system (common law or civil law) to influence CGD.
Originality of the paper – This is one of the few papers to present evidence of the impact of country level attributes on CGD. This study contributes to identifying the attributes that influence CGD with reference to common law and civil law emerging markets.
The uncertainty as to whether investments in riskier and less efficient markets allow managers to ‘beat the market’ remains a question to which answers are required…
The uncertainty as to whether investments in riskier and less efficient markets allow managers to ‘beat the market’ remains a question to which answers are required. Accordingly, the purpose of this chapter is to offer new insights on portfolios of the US, European and Emerging Market (‘EM’) domiciled equity mutual funds whose objectives are the investment in emerging economies, and specifically analyses two main issues: alpha generation and the influence of the funds’ characteristics on their risk-adjusted performance.
The dataset is made up a survivorship-bias controlled sample of 137 equity funds over the period January 2004 to December 2014, which are then grouped into equally weighted portfolios according to the scheme’s origin. The Jensen’s (1968) Single-Factor model along with the Fama and French’s (1993) and Carhart’s (1997) multifactor models are employed to authenticate results and answer both research questions.
Research analysis reveals that EM exposed fund managers fail to collectively outperform the market. It thereby offers ground to believe that the emerging world is very close to being efficient, proving that the Efficient Market Hypothesis (‘EMH’) ideal exists in this scenario where market inefficiency might only be a perception of market participants as any apparent opportunity to achieve above-average returns is speedily snapped up by very active managers. Overall these managers take a conservative approach to portfolio construction, whereby they are more unperturbed investing in large cap equity funds so as to lessen somewhat the exposure towards risks associated with liquidity, stability and volatility.
Furthermore, the findings show that large-sized equity portfolios have the lead over the medium and small-sized competitors, whilst the high cost and mature collective investment vehicles enjoy an alpha which although is negative is superior to their peers. The riskiest funds generated the lowest alpha, and thereby produced doubts as to whether investors should accept a higher risk for the hope of earning higher returns, at least when aiming to gain an exposure into the emerging world.
Mutual fund performance is not an innovative topic so to speak. Nonetheless, researchers and academia have centred their efforts on appraising the behaviour of fund managers domiciled primarily in developed and more efficient economics, leaving the emerging region highly uncovered in this respect. This study, therefore aims at crafting meaningful contributions to the literature as well as to the practical perspective.
Purpose – The purpose of this chapter is to examine methodological trends in emerging market strategy research and to provide a comprehensive review of methods of…
Purpose – The purpose of this chapter is to examine methodological trends in emerging market strategy research and to provide a comprehensive review of methods of assessing group variation in comparative studies.
Methodology/approach – This comprises a systematic review of the methodology of emerging market research over the past 10 years, followed by methodological best practices for comparative studies involving emerging and mature markets, with exemplars from the past research.
Findings – Despite previous calls for more comparative studies in emerging market research, most of the literature is reporting on single-country studies. There is some confusion in terminology and the methods used in this area of strategy research. Increased attention to the “East” calls for a reevaluation of methods utilized in comparative studies. The methods described in this chapter present best practices for comparative research.
Social implications – More comparative studies would substantially expand our understanding of the differences between the emerging and developed markets, and the potential impact of emerging markets on global economy. Rigorous research methods extend validity and generalizability of the studies.
Originality/value – This chapter is the first study to date to analyze the methodological trends of the entire field of emerging market research over the span of 10 years and to provide systematic methodological recommendations tailored to analyzing variation in comparative studies.
This study aims to examine the multidimensional nature of institutional distance as a driver of acquisition decisions in emerging markets. Then, this study aims to offer a…
This study aims to examine the multidimensional nature of institutional distance as a driver of acquisition decisions in emerging markets. Then, this study aims to offer a nuanced perspective on the role of its various formal and informal dimensions by taking into account the potential contingency role played by a firm’s context experience.
Building on institutional economics and organizational institutionalism, this study explores the heterogeneity of institutional distance and its effects on the decision to enter emerging versus advanced markets through cross-border acquisitions. Thus, institutional distance is disentangled into its formal and informal dimensions, the former being captured by regulatory efficiency, country governance and financial development. Furthermore, our framework examines the moderating effect of an acquiring firm’s experience in institutionally similar environments, defined as context experience. The hypotheses are analyzed on a sample of 496 cross-border acquisitions by Italian companies in 41 countries from 2008 to 2018.
Findings indicate that at an increasing distance in terms of regulatory efficiency and financial development, acquiring firms are less likely to enter emerging markets, while informal institutional distance is positively associated with such acquisitions. Context experience mitigates the negative effect of formal distance and enhances the positive effect of informal distance.
This study contributes to institutional distance literature in multiple ways. First, by bridging institutional economics and organizational institutionalism and second, by examining the heterogeneity of formal and informal dimensions of distance, this study offers a finer-grained perspective on how institutional distance affects acquisition decisions. Finally, it offers a contingency perspective on the role of context experience.