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We examine how the international financial crisis of 2007–2010 has impacted on the performance of emerging market MNCs relative to their developed market counterparts. We present our multinational classification system and categorise the world's largest firms, the Global Fortune 500 (GF500), according to their degree of multinationality. We show that the number of GF500 firms from emerging markets has increased significantly over the past decade, and that the international financial crisis of 2007–2010 has further enhanced this trend. We compare the relative risk-adjusted performance of emerging and developed markets before and since the international financial crisis. We show that although the GF500 firms from developed markets tend to be more multinational than the GF500 firms from emerging markets, the latter have outperformed the former over the past decade – both before and after the recent international financial crisis.

Purpose – This chapter illustrates how agent-based modeling (ABM) simulations may be incorporated into future emerging market research so as to build and strengthen existing and new theory. The area of strategy and organizations has used cellular automata, NK landscapes, and network simulations, but international business has rarely entertained their use. This is a loss for the area because emerging markets are rapidly growing and changing while research lags behind. Emerging markets are extremely complex environments best studied using simulations as complementary to existing research tools.

Design/methodology/approach – This chapter divides emerging market studies into three main areas including (1) foreign direct investment, (2) governance structures, and (3) international trade exporting. Through a discussion of the existing research in each of these areas, research opportunities applying ABM are identified. Illustrations allow explanation of the three agent-based simulation methods, as mentioned, based on previous ABM research in strategy and demonstrate how ABM may be applied to future emerging market studies.

Findings – A main insight is that ABM could lead to the rapid catch-up and improvement of emerging market research, especially when data for empirical work is limited, nonexistent, or prohibitively expensive to gather. ABM does not replace empirical work, but past research can be clarified and early theory developed so that if data becomes available, empirical work can be sharp and quickly realized having strong theoretical guidance.

Originality/value – This work, aimed at emerging market researchers, uniquely highlights why and how simulation tools are required and may be used in emerging market research.

Purpose – The purpose of the paper is to advance knowledge on how firms should rethink and develop their innovation architecture by leveraging emerging market opportunities.Design/methodology/approach – The paper provides a conceptual framework comprising the drivers and consequences of innovation architecture across emerging and developed markets. It also highlights emerging market innovation characteristics using detailed examples.Findings/conclusions – Most of the future growth in the global economy will come from emerging markets. Successful global firms will have to rethink and develop their innovation architecture by leveraging innovations developed for emerging markets. By balancing the long-term costs and benefits of innovations in both developed and emerging markets, global firms can successfully reshape their innovation architecture.Practical implications – From a practical perspective, the paper provides guidelines to executives for managing innovation architecture across emerging and developed markets. Innovations appropriately developed and launched in emerging markets have the potential to expand global consumer base and increase shareholder value.Social implications – From a societal standpoint, the paper helps improve consumer welfare in emerging markets by offering a roadmap to develop safe, relevant, and affordable products for mainstream customers. Reverse innovations, developed primarily for emerging markets also benefit consumers in developed markets and enhance their social welfare.Value/originality – The paper provides an original theoretical contribution in an important and underexplored research area – emerging market innovation. It is the first to develop an in-depth analysis of innovation architecture, advance a conceptual framework of the role of emerging markets in the development and consequences of innovation architecture, and offer a roadmap for strategic management of innovation architecture. Academic researchers, practitioners, and policy makers will benefit from this paper.

Do multinational enterprises evolve differently in emerging and developed economies? Although one camp argues that emerging economy multinationals are different from their developed country counterparts owing to the underdeveloped institutions in their home countries, another camp counters that they are the same and the existing international business theories can fully explain their strategies. A third camp suggests a more nuanced perspective by finding value in both approaches. In this introductory chapter, we review this debate and offer new perspectives on how to extend existing theories by accounting for four specific aspects of the home country institutional environments of emerging economies: breadth, depth, timing, and duration of exposure to institutional development. We then discuss how the chapters in this volume extend these ideas.

The main objective of the present chapter is to address empirically the impacts of institutional distance (ID) on the multinationality level of firms from developing countries and interpret how the interaction between ID and firm resources affects firms from developing countries. Using data of firms from developing countries, we estimated an empirical cross-section model. The results show that while cultural distance was not found statistically significant, ID, on the other hand, was statistically significant. The higher the distance between home and host country, the higher the multinationality of firms from developing countries. We also found a positive and statistically significant correlation between intangible resource and multinationality, which suggests a tendency toward new pattern in the internationalization of firms from emerging economies.

The chapter provides an economic explanation and perspectivation of strategic asset seeking of multinational enterprises from emerging economies (EMNEs) as a prominent feature of today’s global economy.

The authors apply and extend the “springboard perspective.” This perspective submits that EMNEs acquire strategic assets in developed markets primarily for use in their home markets.

The authors succumb that the springboard perspective is alluring theoretically as well as empirically as it suggests that when EMNEs acquire strategic assets, they experience liabilities of foreignness (LOF) that are low relative to those of MNEs from developed markets. The authors concede to this LOF asymmetry but also point out that liabilities of outsidership (LOO) can offset or weaken the home-market advantage of some EMNEs when competing with MNEs.

LOO appears as the more relevant concept to use when explaining strategic asset seeking of EMNEs. A set of propositions are formulated to guide empirical testing.

The insights gained from using the springboard perspective and the LOO concept are non-trivial: They basically predict future dominance of ‘insider’ EMNEs at the expense of MNEs from developed markets.

Research on internationalization of emerging market firms (EMFs) has received an increasing attention in the international management field. A central argument in a majority of these studies is that the internationalization of EMFs is different from that of firms from developed economies, and existing internationalization theories are insufficient to fully explain this new phenomenon. We conduct a critical review of important studies on the internationalization of EMFs to address two related questions. First, is the internationalization of EMFs really a new phenomenon, never been witnessed in the past? Second, does it warrant new theoretical developments? Our review suggests that there are important variations in the internationalization strategies of EMFs and developed economy firms, within EMFs from different emerging economies, and during different time periods. A thorough understanding of motivations, paths, processes, and performances of EMFs does require new theoretical approaches that can take into account the unique aspects of EMFs.

I study the relationship between pro-market reforms and the expansion of emerging market multinational companies (EMNCs). Extending institutional economics, I propose a co-evolutionary process, whereby pro-market reforms in emerging markets induce the transformation of domestic firms into EMNCs, and the global expansion of EMNCs in turn facilitates the deepening of pro-market reforms in the home country. Specifically, I first explain how pro-market reforms lead to the emergence of EMNCs via international competitiveness, upgrading needs, and escape; I then explain how the global expansion of EMNCs leads to a deepening of pro-market reforms at home via learning, spillovers, and lobbying. I complement these explanations with a discussion of contingencies at the firm (private vs. state, domestic vs. foreign firms), industry (global vs. local industries), and country (developing vs. transition countries) levels.

The extant literature on emerging market multinationals (EMNEs) suggest that they derive their advantages from factors such as economies of scale, and that they internationalise, in large measure, to access technology. However, support for this framework typically comes from analysis of static data, comparing EMNEs and OECD MNEs at a point in time. Little attention is paid to their development paths in a dynamic setting. We examine these propositions directly using an approach that enables us to decompose productivity growth of firms into its components, namely, changes in scale economies, technological progress and technical efficiency. We compare Chinese MNEs with their non-MNE domestic counterparts and developed country MNEs that have operations in China. We demonstrate that Chinese MNEs continue to derive much of their productivity growth from changes in scale economies, while developed country MNEs continue to have an advantage with respect to technical progress. Both these types of MNEs have a significant advantage over Chinese non-MNE domestic firms.