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Internationalization of Emerging Market Firms: Capability Renewal Through Competitive Dynamics

Author

Listed:
  • Matthew Hawkins

    (ICN Business School, CEREFIGE - Centre Européen de Recherche en Economie Financière et Gestion des Entreprises - UL - Université de Lorraine)

  • Joon-Ho Shin

    (ESADE Barcelona - Sant Cugat)

Abstract

In this paper, we argue that FDI (Foreign Direct Investment) of emerging market firms is driven by the strategic interaction of firms operating within a competitive environment. Through the competitive dynamics approach, based on the action and reaction of competitors, a framework to discuss how emerging market firms react to foreign entrants at home and how this reaction motivates a firm to expand internationally in a fast and risky way is developed. The framework explains the outward FDI mechanisms emerging market firms pursue as they become emerging market multinational enterprises, supporting the springboard behavior of EM MNEs. Firms from emerging markets are not just passive reactors who become multinational enterprises by defending their positions with available resources, but who become MNEs by aggressively searching and acquiring the necessary resources to enhance their competences to secure their key markets and to pursue further expansion. This view helps explain the renewal process were initial competitive advantages mainly based on location advantages of home markets transition into advanced firm-specific advantages, which prior literature has been unable to fully explain.

Suggested Citation

  • Matthew Hawkins & Joon-Ho Shin, 2013. "Internationalization of Emerging Market Firms: Capability Renewal Through Competitive Dynamics," Post-Print hal-01514527, HAL.
    • Handle: RePEc:hal:journl:hal-01514527
    as

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