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Emerging country MNEs and the role of home countries: separating fact from irrational expectations

Author

Listed:
  • Narula, Rajneesh

    () (Henley Business School, University of Reading)

  • Nguyen, Quyen T.K.

    (Henley Business School, University of Reading)

Abstract

This paper takes a look at the research on Emerging country multinational enterprises (EMNEs) over the last 25 years, and argues that growth in EMNE activity over the last 10 years continues to be dominated by Asian Newly Industrialised Countries (NICs), and to a lesser extent by Brazil, Russia, India and China (the BRICS). Instead of focusing on the success stories, we ask: Why have so few emerging home countries failed to fulfil their potential as significant outward investors, and converged (at least) with the NICs? Many of the EMNEs from the non-NICs continue to reflect limited O advantages, and unless they are able to upgrade their firm-specific assets, this trend is likely to continue. We propose that - in line with extant IB theory - the extent and intensity of EMNE activity is a function of their O advantages, which in turn are largely a function of their home country L advantages. We also call into question the soundness of the idea that EMNEs are able to utilise asset-seeking foreign direct investment (FDI) to build up their O advantages. Such asset-augmentation presumes that the firms have non-location-bound firm-specific assets that have the potential to be upgraded and augmented.

Suggested Citation

  • Narula, Rajneesh & Nguyen, Quyen T.K., 2011. "Emerging country MNEs and the role of home countries: separating fact from irrational expectations," MERIT Working Papers 021, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    • Handle: RePEc:unm:unumer:2011021
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    File URL: https://www.merit.unu.edu/publications/wppdf/2011/wp2011-021.pdf
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    References listed on IDEAS

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    1. repec:eee:iburev:v:26:y:2017:i:5:p:855-866 is not listed on IDEAS
    2. Merchant, Hemant, 2012. "The characteristics and stock-market performance of international joint ventures located in three host-country groups: An extension and empirical validation," International Business Review, Elsevier, vol. 21(6), pages 1173-1189.
    3. De Beule, Filip & Sels, Annabel, 2016. "Do innovative emerging market cross-border acquirers create more shareholder value? Evidence from India," International Business Review, Elsevier, vol. 25(2), pages 604-617.

    More about this item

    Keywords

    FDI; Foreign Investment; MNEs; eclectic paradigm; asset-seeking; knowledge flows; emerging markets;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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