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Book part
Publication date: 24 June 2015

Alvaro Cuervo-Cazurra

I study the relationship between pro-market reforms and the expansion of emerging market multinational companies (EMNCs). Extending institutional economics, I propose a…

Abstract

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.

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Emerging Economies and Multinational Enterprises
Type: Book
ISBN: 978-1-78441-740-6

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Article
Publication date: 18 April 2016

Luis Alfonso Dau

The purpose of this paper is to combine notions from the POST Model of Economic Geography and Learning Theory from International Business to study how firms may enhance…

Abstract

Purpose

The purpose of this paper is to combine notions from the POST Model of Economic Geography and Learning Theory from International Business to study how firms may enhance their responsiveness to institutional processes and changes through different forms of international learning. Focussing on one form of institutional changes, namely pro-market reforms, the paper analyzes how firms may boost the potential benefits from such changes through international strategies that increase their access to knowledge spillovers and absorptive capacity. These strategies include international product diversification, enhancing innovation capabilities, informal institutional exposure, accumulated internationalization knowledge, and overall experiential knowledge.

Design/methodology/approach

The hypotheses are tested using generalized least squares models with AR(1) panel-specific autocorrelation and heteroskedasticity correction. Based on the preliminary analyses performed in these studies, the author also executes a Hausman test, Bartlett’s test, and James/Alexander’s test. The results of these analyses indicate that the use of random effects is appropriate; that moderating effects are present; and that multivariate analyses using these moderators are suitable, respectively.

Findings

The results indicate that pro-market reforms have a positive and significant effect on the profitability of firms from developing countries. Furthermore, they provide support for the positive moderating effects of international product diversification, innovation capabilities, informal institutional exposure, accumulated internationalization knowledge, and overall experiential knowledge. Together, these findings suggest that through their international strategic decisions, MNEs can enhance their access to knowledge and become more responsive to institutional changes in their home market.

Research limitations/implications

This paper contributes to the economic geography literature by linking the POST Model with the classification of types of knowledge from Learning Theory. The paper analyzes how characteristics of place, organization, space, and time play a different role for each of the three basic types of knowledge that is relevant for international firms: institutional, business, and internationalization. Furthermore, the paper contributes to the literature on reforms and firm profitability by delving deeper into the moderating effect of strategic decisions on the relationship between reforms and firm performance. This allows us to have a deeper comprehension of how various sources of international learning may enhance the responsiveness of firms to institutional changes.

Originality/value

The paper provides several important contributions to the international strategy literature. First, it contributes to Learning Theory by combining it with the POST Model of Economic Geography to study how each of the three sources of knowledge (and their subcomponents) can be further broken down into factors of place, organization, space, and time. Second, it contributes to the literature of institutional change by studying how knowledge acquired through vastly different means can provide firms with sources of competitive advantage over other local competitors when responding to institutional changes in their home market. Third, it contributes to the literature on reforms and profitability by studying five novel moderators of this relationship.

Details

International Journal of Emerging Markets, vol. 11 no. 2
Type: Research Article
ISSN: 1746-8809

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Article
Publication date: 1 April 2006

Surender Kumar

To measure total factor productivity (TFP) growth in industrial manufacturing for 15 major Indian states for the period 1982‐1983 to 2000‐2001.

Abstract

Purpose

To measure total factor productivity (TFP) growth in industrial manufacturing for 15 major Indian states for the period 1982‐1983 to 2000‐2001.

Design/methodology/approach

Uses non‐parametric linear programming methods; TFP growth is decomposed into efficiency and technological changes and also measures for the bias in technical change. The resulting information is used to examine whether the post‐reform period shows any improvement in productivity and efficiency in comparison with the pre‐reform period.

Findings

Findings of the present exercise indicate the improvement in TFP. The recent change in TFP is governed by the technical progress in contrast with similar gain caused by the improvement in technical efficiency in the pre‐reform regime. The technological progress in state manufacturing exhibited a capital‐using bias during the study period. Regional differences in TFP persist, although the magnitude of variation has declined in the post‐reform period. Moreover, it is also found that there is a tendency for convergence in terms of TFP growth rate among Indian states during the post‐reform years and only the states that were technically efficient at the beginning of the reforms remain innovative.

Originality/value

Decomposing state level data on manufacturing into technical change and efficiency change helps in identifying the directions biases in favour of labour or capital. Also, this analysis demonstrates the richness of linear programming technique that allows for an investigation of important research questions on the underlying processes that influence TFP growth.

Details

International Journal of Productivity and Performance Management, vol. 55 no. 3/4
Type: Research Article
ISSN: 1741-0401

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Book part
Publication date: 11 November 2014

Afonso Fleury and Maria Tereza Leme Fleury

This paper questions currently accepted arguments about the impacts of pro-market reforms in the internalization of emerging country firms, through an in-depth analysis of…

Abstract

Purpose

This paper questions currently accepted arguments about the impacts of pro-market reforms in the internalization of emerging country firms, through an in-depth analysis of the Brazilian case, thus revealing new dimensions to add to the extant literature.

Design/methodology/approach

Historical analysis is the central mode of investigation leading to a commitment of offering historically grounded explanation for pro-market reform impacts in the Brazilian industry.

Findings

Outcomes reveal that the impacts of pro-market reforms depend on (a) the purpose of their adoption, (b) the compatibility with the features of the local institutional context, and (c) the relative bargaining power of local firms vis-à-vis foreign multinationals.

Research limitations

The research is based on the Brazilian experience only which is indicative of what may have happened in other Latin American countries; however, the analytical approach may be extended to the study of other emerging countries.

Practical and social implications

By having a systemic perspective encompassing the different actors and the interdependence among themselves, it allows for an enhanced view of the factors which led to the adoption of pro-market reforms and the forces which acted for its configuration, thus helping policy-makers to better approach industrial policy-making.

Originality

A longitudinal perspective within a historical analysis is adopted, focusing on the interplay of macro-level and firm-level factors, resulting in a better understanding of the reasons which led to the adoption of pro-market reforms, the resistance to its implementation and its real outcomes.

Details

Emerging Market Firms in the Global Economy
Type: Book
ISBN: 978-1-78441-066-7

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Book part
Publication date: 24 November 2016

Luis Alfonso Dau and David Wesley

The goal of this chapter is to discuss the managerial implications of regulatory reforms in BRICS countries and how those reforms affect the strategy and performance of…

Abstract

Purpose

The goal of this chapter is to discuss the managerial implications of regulatory reforms in BRICS countries and how those reforms affect the strategy and performance of BRICS multinationals. In particular, we consider (1) how firms may learn from the institutional and competitive changes at home that accompany pro-market reforms and use this knowledge to venture out successfully across borders, (2) how firms may learn through their international operations as a means to enhance their competitiveness and responsiveness to reforms in their home market, and (3) how BRICS multinationals differ from other emerging market multinationals.

Methodology

The chapter is primarily conceptual and relies heavily on case studies, interviews, and public financial data.

Findings

Ultimately, reforms are implemented by the state, but the strategic responses of managers to these reforms are largely what determine whether their firms will survive and thrive under the new and evolving regulatory conditions. BRICS firms are particularly well positioned to take advantage of reforms within their own countries and in other emerging markets, including other BRICS nations.

Originality/value

The chapter underscores the importance of aligning strategy with home and host market policies and environments.

Research Limitations

The observations presented are conceptual and have not been verified quantitatively. We rely heavily on historical observation and, therefore, much of the analysis is selective to those firms and may not apply to other firms.

Details

The Challenge of Bric Multinationals
Type: Book
ISBN: 978-1-78635-350-4

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Article
Publication date: 14 September 2018

Amit Baran Chakrabarti and Arindam Mondal

The purpose of this paper is to ascertain the impact of family ownership on the entrepreneurial orientation (EO) of firms in an emerging market and the contingencies under…

Abstract

Purpose

The purpose of this paper is to ascertain the impact of family ownership on the entrepreneurial orientation (EO) of firms in an emerging market and the contingencies under which it is likely to be affected.

Design/methodology/approach

The paper adopted a panel data multiple regression using ordinary least square methodology on a sample of 51,972 observations belonging to 12,250 firms from India.

Findings

The study finds that family businesses have higher EO than non-family firms. However, it is likely to be affected during institutional transition due to environmental uncertainty. Furthermore, during institutional transition, there will be differences in the EO of family business groups and stand-alone family firms due to the former’s ubiquitous network-level resource advantages.

Research limitations/implications

This paper contributes to the literature on family business by reconciling the positive and negative views on the effect of family ownership on EO by arguing that the risk-taking behavior of family firms is contingent on the environmental conditions and the resource position of the firm.

Practical implications

This study will enable managers and other stakeholders to predict the entrepreneurial attitude of family-owned firms during environmentally stable as well as turbulent times.

Social implications

This study highlights the implication of institutional transition through reforms on a vital part of the economy. Policy makers have to be sensitive to repercussions on family business due to environmental turbulence.

Originality/value

This is one of the first papers that investigate the influence of institutional transition and the resource position of Indian family firms on their EO.

Details

International Journal of Entrepreneurial Behavior & Research, vol. 26 no. 1
Type: Research Article
ISSN: 1355-2554

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Article
Publication date: 12 December 2017

Kannan Ramaswamy and Saptarshi Purkayastha

This paper aims to report the findings from a longitudinal study of Indian business groups responding to the pro-market reforms that the government had initiated. It…

Abstract

Purpose

This paper aims to report the findings from a longitudinal study of Indian business groups responding to the pro-market reforms that the government had initiated. It explores their diversification choices at the group level and the group performance consequences of these choices during a period of institutional changes (1990-2008).

Design/methodology/approach

Ordinary least squares regressions were used to analyze data spanning the 1988-2008 study period for 98 Indian business groups.

Findings

Results show that business groups that focused their portfolios in the early stages of institutional reforms tended to perform worse than their counterparts that did not do so. However, as market reforms became more established, business groups that made the transition from an unfocused to a more focused portfolio experienced superior performance consequences.

Originality/value

The findings underscore the temporal dimension of focusing and suggest that both changing strategy by refocusing business portfolio too early or waiting too long to refocus can hurt performance outcomes.

Details

Journal of Asia Business Studies, vol. 11 no. 4
Type: Research Article
ISSN: 1558-7894

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Article
Publication date: 31 May 2011

Sameeksha Desai, Johan Eklund and Andreas Högberg

The purpose of this paper is to study the efficiency of capital allocation, across levels of ownership, in the aftermath of pro‐market reforms in India.

Abstract

Purpose

The purpose of this paper is to study the efficiency of capital allocation, across levels of ownership, in the aftermath of pro‐market reforms in India.

Design/methodology/approach

The paper measures investment efficiency using the accelerator principle and examines the effect of ownership type on capital allocation.

Findings

No significant improvement in capital allocation during the period studied is found. The findings suggest firms face significant costs in adjusting their capital stock.

Originality/value

The paper uses unique data to estimate the elasticity of capital with respect to output.

Details

Journal of Financial Economic Policy, vol. 3 no. 2
Type: Research Article
ISSN: 1757-6385

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Book part
Publication date: 24 June 2015

Elitsa R. Banalieva, Laszlo Tihanyi, Timothy M. Devinney and Torben Pedersen

Do multinational enterprises evolve differently in emerging and developed economies? Although one camp argues that emerging economy multinationals are different from their…

Abstract

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.

Details

Emerging Economies and Multinational Enterprises
Type: Book
ISBN: 978-1-78441-740-6

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Article
Publication date: 21 August 2017

Tyler Watts and Molly Woodruff

The purpose of this paper is to examine differences in property institutions in the USA and India and their effects on agricultural productivity.

Abstract

Purpose

The purpose of this paper is to examine differences in property institutions in the USA and India and their effects on agricultural productivity.

Design/methodology/approach

This paper undertakes a case study of industrial organization of agriculture, comparing agricultural development in the USA and India, with a focus on changes in farm size over time.

Findings

In the USA, unlimited individual land ownership has enabled the gradual, long-term development of scale economies in agriculture through the application of capital and technology. In contrast, land reforms in India, especially land ceilings that limit farm size, have stunted productivity growth in agriculture by limiting achievement of scale economies and capital formation.

Practical implications

The finding that India’s consistently meager agricultural productivity stems largely from legal limitations on land ownership indicates that reforms that create a US-style open-ended land ownership structure would greatly increase farm productivity and total crop output in India.

Originality/value

This paper presents a side-by-side analysis of the USA and India and their radically different paths of agricultural development over time, and connects these divergent outcomes directly to the underlying institutional framework of property rights. Moreover, the paper analyzes the prospects for pro-market reform in light of public choice political economy, specifically applying Tullock’s insights regarding the “transitional gains trap.”

Details

Journal of Entrepreneurship and Public Policy, vol. 6 no. 2
Type: Research Article
ISSN: 2045-2101

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