Which Business Strategy Do Multinational Corporations Need to Successfully Enter the Markets of Less Developed Countries?

For a long time, multinational corporations did not consider the Third World as a marketplace. Although now emerging and developing markets are getting more attention from multinational corporations, the multinationals do not always succeed in exploring these markets in a profitable manner. Various authors such as Prahalad, Hart, Hammond, Christensen, Lieberthal, London, Milstein, etc., are advocating that multinational corporations have an important role to play in sustainable development and that they can make a profit at the same time. To reach both sustainability and profitability, however, corporations need to adapt their business models, strategies and products accordingly. A review of the literature in the research field of multinational market entry in emerging and developing countries leads to the division of seven strategy changes proposed in the literature: the elimination of the Western bias towards poor countries, the creation of a native capability, the expansion of stakeholder management, the choice for non-traditional partners, the adaptation of investment decisions, the restructuring of the organization, and the importance of technological innovation. A comparison of the most important theories and used case studies gives a clear view of the evolution of developing and emerging market strategies and of the decisive strategy changes, namely the creation of a native capability and the choice for non-traditional partners.This paper was presented at the 16th International Conference of the International Trade and Finance Association in Lodz, Poland, May 11, 2006.