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One of the more important and interesting phenomena in international business in recent times is the upgrading and catchup of firms from emerging economies. How do these firms upgrade and catchup? This paper reviews and synthesizes the literature on upgrading and catchup by emerging economy firms and develops a model and testable propositions to advance research on the topic.

Reviews the latest management developments across the globe and pinpoints practical implications from cutting‐edge research and case studies.

This briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context.

In the business world, imitation gets a bad rap. We see imitating firms as “me too” players, forced to play catchup because they have nothing original to offer. In Copycats, Oded Shenkar challenges this viewpoint. He reveals how imitation is as critical to prosperity as innovation and how savvy imitators generate huge profits. They save not only on R&D costs but also on marketing and advertising investments made by first movers, and avoid costly errors by observing and learning from others' trials.

Provides strategic insights and practical thinking that have influenced some of the world's leading organizations.

Provides strategic insights and practical thinking that can have a broader social impact.

Copycats presents suggestions for making imitation a core element in your competitive strategy and pairing it powerfully with innovation.

Contrasting local adaptation, which focusses on foreign multinationals learning about and adapting to local (host country) culture and environment, reverse adaptation refers to the case where an MNE’s local employees learn, assimilate and modify their personal behavior (e.g. values, norms) and professional competence (e.g. standards, goals, language, knowledge, capabilities) in order to fit the MNE’s global mindset and global competence set so that they can be internationally reassigned. The purpose of this paper is to take the first step toward addressing this nascent phenomenon and practice.

This study uses combined inductive and ethnographic methods to explore the importance, process and practice of reverse innovation. This study defines reverse adaptation, illustrates the major driving forces underlying reverse adaptation, and suggests how MNEs should prepare for it. As reverse adaptation is a promising area for research, this paper also proposes a research agenda for international management scholars.

MNEs need to act at both local and global levels in a way that recognizes the interdependence between the two. Too often global companies have approached their local talent needs in an uncoordinated and unproductive way. Reverse adaptation view suggests that MNEs can create a competitive advantage by taking a global approach to talent. Cultivating and transforming local talent to become global talent necessitates endeavor from a wide range of corporate, subsidiary and individual levels, in cultural, professional, structural, informational and organizational aspects.

Reverse adaptation is a promising area of research because it provides the opportunity to enrich mainstream theories and literatures in a number of areas. This nascent phenomenon has not yet been studied, and this paper represents the first effort to do so. From both academic and practice viewpoints, reverse adaptation has a significant impact on global talent management, knowledge flow across borders, capability catchup and global integration design. Today’s glocalized business world, with heightened integration of world economy, creates an expectation for the continuing growth of reverse adaptation.

To answer the questions: what roles windows of opportunity act in the catchup process of latecomers, what strategies latecomer enterprises should adopt to size windows of opportunity to catch-up with incumbents even going beyond?

This paper studies the catch-up history of the Chinese mobile phone industry and proposes a sectoral innovation system under scenario of technology paradigm shifts. Then a history-friendly simulation model and counterfactual analysis are conducted to learn how different windows of opportunity and catch-up strategies influence the catch-up performance of latecomers.

Results show latecomers can catch up with technology ability by utilizing technology window and path-creating strategy. However, catching up with the market is not guaranteed. Demand window can help latecomers to catch up with market as it increases their survival rates, different sized windows benefit different strategies. However, it also enlarges incumbents' scale effect. Without technology window technology catch up is not guaranteed. Two windows have combination effects. Demand window affects the “degree” of change in survival rates, while the technology window affects the “speed” of change. Demand window provides security; technology window provides the possibility of a breakthrough for technology ability.

The findings of this paper provide theoretical guidance for latecomer enterprises to choose appropriate catch-up strategies to seize different opportunity windows.

This paper emphasizes the abrupt change of industrial innovation system caused by technology paradigm shifts, which makes up for the shortcomings of previous researches on industrial innovation system which either studied the influence of static factors or based on the influence of continuous changes.

The purpose of this paper is to highlight how the basic binomial option pricing model (BOPM) might be used by regulators to help formulate rules, prior to financial crisis, that help prevent loan overstatement by banks in emerging market economies undergoing financial crises.

The paper draws on the theory of soft budget constraints (SBC) to construct a simple model in which banks overstate loans to minimize losses. The model is used to illustrate how guarantees of bailout assistance (BA) (to banks) by crisis stricken countries’ financial authorities may encourage banks to overstate loans and delay the implementation of IFRS for loan valuation. However, the model also illustrates how promises of BA may be depicted as binomial put options which provide banks with the option of either: reporting loan values on poor projects accurately and receiving the loans’ liquidation values; or, overstating loans and receiving the guaranteed BA. An illustration is also provided of how authorities may use this representation to help minimize bank loan overstatement in periods of financial crisis. In order to provide an illustration of how the option value of binomial assistance may evolve during a financial crisis, the model is generalized to the Mexican financial crisis of the late 1990s. During this period, Mexican authorities’ guarantees of BA to the nation’s largest banks encouraged those institutions to overstate loans and delay the implementation of (previously adopted) international “best practices” based loan valuation standards.

Application of the model to the Mexican financial crisis provides evidence that, in spite of Mexico’s “official” 1997 adoption of international “best accounting practices” for banks, “iron clad” guarantees of BA by the country’s financial authorities to Mexico’s largest banks provided those institutions with an incentive to knowingly overstate loans in the late 1990s and early 2000s.

The model is compared against only one country in which the BA was directly infused into banks’ loan portfolios. Thus, as conceived, it is directly applicable to crisis countries in which the bailout took this form. However, the many quantitative variations of SBC models as well as recent studies which have applied the binomial model to other forms of bailout (e.g. direct purchases of bank shares by authorities) suggest that the model could be modified to accommodate different bailout scenarios.

The model and application show that guaranteed BA can be viewed as a put option and that ex-ante regulatory policies based on the correct valuation of the BA as a binomial option might prevent banks from overstating loans.

Use of the binomial or similar approaches to valuing BA may help regulators to determine the level of BA that will not encourage banks to overstate the value of their loans.

Recent research has used the BOPM to value, on an ex-post basis, the BA which appears on the balance sheet of institutions which have been rescued. However, little research has advocated the use of this type of model to help prevent, on an ex-ante basis, the overstatement of loans on poor projects.

For the past three decades, the dominant economic policy environment across the Anglosphere has assumed that industrial performance results from increasing national competitiveness. The US Government and others have extensively used the tools of deregulation that emerged from the influential frameworks of Michael Porter and the Chicago School. That both the contributing analysis and attendant policy environment largely neglected the very source of national disadvantage, mostly Japanese industry in the 1970s and 1980s, remains surprising. What was going on in Japan at the time, and to some extent continues today, remains largely hidden. The aim of this paper is to expose one source of Japan’s influential competitive advantage – the human resource.

This paper, through the translation of a Japanese-language paper by Professor Emeritus Masaki Saruta, introduces the Japanese phenomenon of managed education in Aichi Prefecture, home of the Toyota Motor Corporation, and provides insight into the lifestyles of the Japanese workers who live and work in corporate castle towns that feed Toyota. Inductive content analysis was used to identify four themes that can be identified as the strategies used to produce a homogenous pool of labor that sustains the Toyota Way philosophy and Toyota Production System.

The content analysis identified four major themes: Toyota’s abnormal level of influence over local government, a unique education system of education management, a closed labor market and the homogeneity of labor. It is only now that business leaders in the Anglosphere are able to comprehend the vastness and depth of inculcation and nurturing policies of Toyota and other Japanese industrial giants – something business leaders in the Anglosphere today can only dream. It now becomes evident that Chandler’s visible hand remains alive and well, but critical drivers of its success in Japan and Toyota were largely invisible to the West.

The research required the knowledge of one of Saruta’s works that is only published in Japanese, and therefore, inaccessible to researchers in the Anglosphere. The translation process and development of themes is reported in detail. The findings are then located in the broad context of national competitive advantage.

With the insight presented in this paper, business and government leaders may now be empowered to implement policies and practices to nurture a pool of labor more conducive with the organizational strategic policy. While leaders in the Anglosphere are able to implement policy, there also remains a new threat to economic sovereignty – the nurturing of human resources in the dormitories, refectories and shopping malls of industrial China.

The development of a company-focused workforce to support corporate castle towns, one of the sources of national advantage, has been identified in this paper. The social implications are twofold. First, in Japan, the nature and influence of these towns are accepted and heralded by the community. Second, outside of Japan, and especially across the Anglosphere, these towns are a major source of competitive advantage.

Through the translation of original research published in the Japanese-language medium, this research provides otherwise inaccessible insight into the inner workings and effectively the “black box” of what was Japan Inc. in an era when business people in the West were playing catchup. As the debate on globalization extends to sovereignty across the Anglosphere, it is beholden on the academic community to provide effective solutions for industrial competitiveness.

As part of a new focus on a better balance of investment in innovation activities in developing countries, this study aims to understand the effects of technological attributes (technological complexity and type of technology) on manufacturing technology sourcing (whether firms choose either internal development or external sources).

Multiple-case studies were conducted in the Peruvian manufacturing sector.

The authors found that, across Peruvian manufacturing firms, they develop a certain manufacturing technology related to their capabilities. However, when the total cost of acquisition is lower than internal costs of developing technologies, they will choose external sources, regardless of their capabilities and complexity of the technology. In addition, analysis of the type of technology indicated that the pursuit of simultaneous exploration and exploitation occurs when firms use external sources rather than internal.

This study has the limitation that data have been collected years after the decision-making process; the results are based solely on the authors’ analysis using the case of Peruvian industry, and they do not track the impact on the performance of manufacturing technology decisions.

The findings have important implications for technology managers of South American manufacturing firms that are decision makers in the sourcing of new manufacturing technologies.

The results of this study provide literature with insights into technology sourcing strategy in developing countries and the importance of progress in transitioning to technological innovation and catchup.

Como parte de um novo foco em um melhor equilíbrio do investimento em atividades de inovação nos países em desenvolvimento, este estudo compreende os efeitos dos atributos tecnológicos (complexidade tecnológica e tipo de tecnologia) no suprimento de tecnologia de fabricação (se as empresas escolhem desenvolvimento interno ou fontes externas).

Estudos de casos múltiplos foram conduzidos no setor manufatureiro peruano.

Descobrimos que, em todas as empresas de fabricação peruanas, elas desenvolvem uma certa tecnologia de fabricação relacionada às suas capacidades. No entanto, quando o custo total de aquisição é menor do que os custos internos de desenvolvimento de tecnologias, eles escolhem fontes externas, independentemente de suas capacidades e complexidade da tecnologia. Além disso, a análise do tipo de tecnologia indicou que a busca da exploração e exploração simultâneas ocorre quando as empresas usam fontes externas em vez de internas.

Este estudo tem a limitação de que os dados foram coletados anos após o processo de tomada de decisão, os resultados são baseados exclusivamente em nossa análise usando o caso da indústria peruana e não acompanhamos o impacto sobre o desempenho das decisões de tecnologia de fabricação.

Os resultados deste estudo fornecem à literatura insights sobre a estratégia de fornecimento de tecnologia nos países em desenvolvimento e a importância do progresso na transição para a inovação tecnológica e o catch-up.

Sourcing de tecnologia, Tecnologia de fabricação, Peru

Como parte de un nuevo enfoque en un mejor equilibrio de la inversión en actividades de innovación en los países en desarrollo, este estudio comprende los efectos de los atributos tecnológicos (complejidad tecnológica y tipo de tecnología) en la fuente de tecnología de manufactura (ya sea que las empresas elijan desarrollo interno o fuentes externas).

Se realizaron estudios de casos múltiples en el sector manufacturero peruano.

Los resultados muestran que, en todas las empresas manufactureras peruanas, desarrollan una cierta tecnología de manufactura relacionada con sus capacidades. Sin embargo, cuando el costo total de adquisición es menor que el costo interno de desarrollar tecnologías, elegirán fuentes externas, independientemente de sus capacidades y la complejidad de la tecnología. Además, el análisis del tipo de tecnología indicó que la búsqueda simultánea de exploración y explotación ocurre cuando las empresas utilizan fuentes externas en lugar de internas.

Este estudio tiene la limitante de que los datos fueron recopilados luego del proceso de toma de decisiones, los resultados se basan únicamente en la industria peruana y no analizamos el impacto que tuvieron las decisiones recolectadas.

Los resultados de este estudio proporcionan información sobre la estrategia de abastecimiento de tecnología en los países en desarrollo y la importancia del progreso en la transición a la innovación tecnológica y la puesta al día.

Fuente de tecnología, Tecnología de fabricación, Perú

The purpose of this study is to assess the potential economic cost of the COVID-19 pandemic on China's macroeconomy and agri-food system and provide policy recommendations to stimulate economic growth and agri-food system development.

An economy-wide multisector multiplier model built on China's most recent social accounting matrix (SAM) for 2017 with 149 economic sectors is used to assess the impact of COVID-19 on China's macroeconomy and agri-food system. SAM multiplier analysis focuses on supply chain linkages and captures the complexity of an interconnected economy.

The paper finds that both the macroeconomy and agri-food systems are hit significantly by COVID-19. There are three main findings. First, affected by COVID-19, GDP decreased by 6.8% in the first quarter of 2020 compared with that in 2019, while the economic loss of the agri-food system is equivalent to 7% of its value added (about RMB 0.26 trillion). More than 46m agri-food system workers (about 27% of total employment) lost their jobs to COVID-19 in the lockdown phase. The COVID-19 affects the employment of unskilled labor more than that of skilled labor. Second, when the economy starts to recover during the second and third quarters, the growth rate in the value added of the agri-food system turns positive but still modest. Many jobs resume during the period, but the level of agri-food system employment continues to be lower than the base. The agri-food system employment recovery is slower than that of other sectors largely due to the sluggish recovery of restaurants. Agri-food system employment drops by 8.6m, which accounts for about 33% of the total jobs lost. Third, although the domestic economy is expected to be normal in the fourth quarter, external demand still faces uncertainties due to the global pandemic. The agri-food system is projected to grow by 1.1% annually in 2020 with resuming export demand, while only by 0.4% without resuming export demand. These rates are much lower than an annual growth rate of 4.3% for the agri-food system in 2019. The results also show that, without resuming export demand, China's total economy will grow less than 1% in 2020, while, with export demand resumed, the growth rate rises to 1.7%. These rates are much lower than an annual GDP growth rate of 6.1% in 2019.

The results show that continuously reducing economic dependency on exports and stimulating domestic demand are key areas that require policy support. The agri-food system can play an important role in supporting broad economic growth and job creation as SMEs are major part of the AFS. Job creation requires policies to promote innovation by entrepreneurs who run numerous SMEs in China.

This paper represents the first systematic study assessing the impact of COVID-19 on China's agri-food system in terms of value added and employment. The assessment considers three phases of lockdown, recovery and normal phases in order to capture the full potential cost of COVID-19.

The purpose of this important Act—the short title of which heads this article—is to consolidate and amend the laws for regulating the labelling and preventing the importation or sale of food and drugs which are unwholesome or adulterated or incorrectly or falsely described, and for regulating the labelling and preventing the importation or sale of disinfectants which are incorrectly or falsely described. The Act which was very badly needed and in the words of the Minister who introduced it “long overdue” came into force on the 1st January, 1930. It completely replaces five previous Acts which had been in existence for many years, were only operative in their respective provinces, and were unsatisfactory in other respects. So inadequate indeed were they that they may almost be said to have hindered rather than helped the Department whose business it was to administer them. Moreover, if further justification were needed, and for the moment ignoring the interests of the other units of population, it may be pointed out that the present population of European descent in the Union of South Africa is nearly equal to that of twice the population of the city of Glasgow; and that in it is to be found all the administrative knowledge and technical skill on which the future prosperity of the country must depend. The Acts repealed were the Sale of Food and Drugs and Seeds Act of the Cape of Good Hope Province No. 5, 1890; the Adulteration of Food Act, Natal No. 45, 1901; the Sale of Food and Drugs Ordinance, Orange Free State, No. 32, 1906; and two acts of the Transvaal, the Sale of Adulterated and Tainted Foodstuffs, Liquors, and Medicines, Law 29, 1896, and the Storage and Adulteration of Food Stuffs, Law 6, 1898. The last Report of the Department of Public Health issued under the old conditions was for the year ended 30th June, 1929. This states that the Acts which have been repealed were so inadequate and ineffective and contained so many loopholes and ambiguities that efficient administration was in many cases impossible and adulteration even of essential foodstuffs was rife. No power existed whereby standards could be laid down, or false description, or false labelling prevented. For example the Natal Act, which was modelled on 38 and 39 Vic. c. 68 and the Margarine Act, 1897, made no provision for prosecuting the importer of adulterated or unwholesome food stuffs and legal action was only possible if the goods were being sold, and then only the actual vendor could be proceeded against. Under the Cape Province law if an imported food stuff was suspect the consignment could be detained by order of the Department at the port of entry pending analysis or further examination. In the event of the consignment being reported against as unwholeso it might be destroyed. In no case was it allowed go into commerce. In Natal, however, no powe sted in law to detain at the port materials of doubtful purity. ’Up country they went. If the examination or analysis showed that they were unfit for consumption a sort of chase ensued along the railway line after perhaps a delay of a week or more, with, of course, a correspondingly lessened chance of tracing the offending material. The Natal and Cape Province Acts were both administered from Cape Town. Thus it has happened that a firm of importers has consigned one lot of the same kind of goods to a Cape Province port, the other to a Natal port. The reason for the detention of one lot and not the other was not understood, the administration was brought into discredit while public time and money were wasted, and public health perhaps endangered. The Transvaal Act was so generally worded that it gave no protection to the consumer, while that part of Law No. 6, which it embodied, stated that foods for sale must be kept in a special compartment—clean, well ventilated and not connected with a sleeping room or stable (italics ours). It may be remarked that the Transvaal, in which province of the Union this entirely inadequate law was in operation up to the end of last year, includes the Witwatersrand district and the city of Johannesburg with a population of 350,000, the third largest city in the African continent, and the second in importance in the Union. The administration of a code of public health laws in such relatively small and densely populated countries as England, France, or Germany presents in its details the strongest possible contrast to the administration of a similar code in such a country as the Union of South Africa. The former countries are inhabited by people of the same race and language, having the same traditions, mode of life, and standards of culture. They have been long settled. They are amply provided with every means for rapid transport and communication. The existence of large commercial and industrial populations in densely peopled areas has long ago forced on public attention the needs of public health. An enlightened public opinion can readily make itself heard and felt, and in general such opinion is in hearty agreement with authority when such authority enforces the law. But in the case of South Africa and in two out of the three other Dominions, we have to consider at the outset countries of continental dimensions, and in the particular case of South Africa of a continental character if regard be paid to the variety and different levels of culture exhibited by its inhabitants. The area of the Union of South Africa is in round figures nearly half a million square miles—approximately equal to the united areas of Great Britain, France, and Germany. The population is under eight millions, let us say equal to that of Greater London! Administrative difficulties are increased by the mere physical fact of distance and sparse population. It is on record that in some up country districts which are difficult of access supplies of the more grossly adulterated—and this is saying a good deal—or more improperly described articles of food have been sent, and as the officers of the Public Health Department cannot be everywhere at the same time the sale of such things can be effected with little risk of detection. But this by no means exhausts the difficulties that have to be overcome. Out of the total population only about 1,700,000, or roughly 20 per cent. are of pure European descent. About 70 per cent. are negroes, who at the time of settlement were in a state of neolithic culture. Nor are they capable of conforming to the standard of living of the European population. They would, one and all, undoubtedly revert to their primitive condition if the influence of Europeans was, conceivably, withdrawn; about 2½ per cent. are Asiatics; the rest are described as “mixed and other coloured.” Evidently the people of European descent are the only ones who are able properly to appreciate the importance of health laws, but some of them are the very people who, by their misdoings, give the most trouble to the health authorities. Perhaps no country in the world has made so rapid a material advance or altered so profoundly as South Africa has within living memory. It is common knowledge that the gold mining industry is primarily the cause of this. It has attracted a large white population, and negroes come in large numbers to do manual work of a simple kind for a term under contract. The fact that they are under contract brings them in a special way under the protection of the law. Held as they are by the terms of the contract to reside in the district where the work which they have contracted to do lies, far removed from their natural surroundings, and having the minds of children they present a problem of special anxiety to the authorities. They have to be controlled, but their physical welfare has also to be looked to. Their exploitation by a certain class of whites has to be prevented. The last report of the Department of Public Health for the year ending 30th June, 1929, states that while the conditions of the negroes working in the gold mines is on the whole satisfactory, in certain mines it is far from being so. Thus (p. 21) it is stated that the regulations regarding rations issued to the negroes were being “deliberately evaded or not properly carried out.” The anti‐scorbutic ration of germinated beans was found not to have been issued. The bread contained less than the 64 per cent. of wheaten flour, and more than the 36 per cent. of mealie meal as laid down by regulation, and this malpractice was of course difficult, if not almost impossible, to detect after the completion of the baking process. Moreover, such bread was to sight and taste grossly inferior. As bread is an essential food stuff, and as mealie meal is cheaper than wheat flour, this is as good an instance of the kind of adulteration referred to above as could be wished for. Moreover, it is of the meanest possible description. To cheat a negro working for a shilling a day out of his bread ! It is not surprising to learn that overcrowding in quarters which are verminous and in other respects insanitary is a concomitant, that typhoid fever is prevalent to “an excessive extent” in such mines, and that “definite action and improvement are called for.” It is, however, not only the negro working in the mines who is liable to have his inability to protect himself or his ignorance exploited to his own undoing. The negro living far away from these centres of “civilization” is liable to suffer. Thus, in the early part of last year complaints from Rhodesia and subsequent investigation by the Union police authorities showed that “several registered chemists and druggists most of them having businesses in Natal” were selling in the Union and exporting to Rhodesia various nostrums specially intended for the natives (p. 59). Prosecutions were instituted under the Public Health Act, 1919, and the South African Pharmacy Board is actively co‐operating with the authorities to suppress “these disgraceful practices.” These facts well illustrate the special difficulties that arise in the process of administering a public health act when degenerate whites exploit ignorant negroes. The Asiatics are on an admittedly higher intellectual level than the negroes, but their conception of what is right and fit from a sanitary standpoint are on a level with those that we generally associate with the Orient, and as they are apparently in full agreement with that eminent exponent of the principles of the Manchester School in this country who regarded adulteration as a mere form of trade competition, they are no better than some of their European competitors when they see a chance of making money, though swindling their neighbours may be an inseparable accident of the process. It will be readily understood that in such a vast and sparsely populated region with inhabitants having widely separated standards of culture, differences of tradition, requirements and rules of life administrative difficulties must be very great. Thus the last report states that eleven medical officers travelled—during the year the report refers to—over a distance of 77 thousand miles—52 thousand by rail, the rest by road. Four out of the eleven travelled a distance of about ten thousand miles each. Their duties included the systematic general inspection of local authority areas; mines, factories and works inspection—so far as health conditions were concerned; water supply; drainage; housing, including industrial housing; overcrowding and insanitary conditions. These duties, together with others not here specified, indicate the vast economic changes that have taken place in South Africa during the last forty years. These changes are largely in the direction of industrialization and that imposes heavier duties on the officials of the Health Department and still greater vigilance in applying regulations which while up to the level of the best European standard have to be applied in the interests of the mixed community we have described. Within living memory South Africa exported only the raw products of the farm; imported manufactured stuff was consumed for the most part by the white population of the coast towns; while its manufactures were such that “a manufactured article of local origin was a rarity that excited public comment.” The Witwatersrand started on its career in 1886, and under this impulse the country began to be rapidly opened up. The war of 1899–1902 resulted in the Act of Union in 1910 The Great War did the rest. In 1917 the Department of Public Health was formed. For two years it existed as a sub‐Department of the Department of the Interior. In 1919 the importance of its work was recognised and it was made a separate Department under its own Minister—the Minister for Public Health. Under the Minister is the Secretary for Public Health on whom falls the duty of administration. The work of the Department is, as would be expected, most varied Brief reference has already been made to this. It is in contact at many points with national life. Its activities are educational, medical and sanitary.