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Do we need different frameworks to explain infant MNEs from developing countries?

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  • Narula, Rajneesh

    () (Henley Business School, University of Reading)

Abstract

Applying extant IB theory, I argue that initial firm internationalisation is shaped by the interdependence and dynamic interaction between its O assets and the L assets of its home location. Regardless of nationality, the initial O assets of an infant MNE tend to be constrained by the L assets available to them, rather than by their strategy. I also contrast the modus operandi of developing country (DC) infant MNEs with those from advanced economies, highlighting the similarities and differences. The O assets of DC MNEs are largely determined by home country influences. Advanced economy MNEs have a larger set of L assets to draw from, because a wider variety of non-home country influences exist. Strategy and host countries begin to play a greater role once MNEs have moved past the nascent stage. I also take a look at the changes due to globalization and how it has affected the propensity of firms to internationalise. I argue that successful firms (regardless of nationality) will increasingly explore internationalisation, but the basic pre-condition - that of possessing competitive O assets - remains the same. There is also no reason to believe that this is likely to happen disproportionately from the developing countries.

Suggested Citation

  • Narula, Rajneesh, 2011. "Do we need different frameworks to explain infant MNEs from developing countries?," MERIT Working Papers 073, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  • Handle: RePEc:unm:unumer:2011073
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    File URL: https://www.merit.unu.edu/publications/wppdf/2011/wp2011-073.pdf
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    More about this item

    Keywords

    FDI; MNEs; eclectic paradigm; developing countries; emerging economies; markets; multinational enterprises;

    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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