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Internationalization of Emerging Market Multinational Enterprises in a Volatile Environment
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Internationalization of Emerging Market Multinational Enterprises in a Volatile Environment

A special issue of Journal of Risk and Financial Management (ISSN 1911-8074). This special issue belongs to the section "Business and Entrepreneurship".

Deadline for manuscript submissions: closed (31 December 2022) | Viewed by 42782

Special Issue Editors

Dr. Yi Li

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Guest Editor
Discipline of International Business, Emerging Market Internationalization Research Group (EMIRG), The University of Sydney Business School, Darlington, NSW 2006, Australia
Interests: internationalization of firms in emerging economy; institutional approaches of business strategy; dynamic evolution of control in international joint ventures; innovation in emerging high-technology industry; risk of international business strategy
Dr. Yifan Zhong

E-Mail Website
Guest Editor
UWA Business School, The University of Western Australia (M261), 35 Stirling Highway, Perth 6009, Australia
Interests: international business; human resource management; innovation and technology management
Dr. Xuefeng Shao

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Guest Editor
Newcastle Business School, University of Newcastle, Newcastle, NSW 2300, Australia
Interests: environmental management; environmental safety; environmental pollution; low-carbon management; risk management; marketing management; e-commerce; social networks
Special Issues, Collections and Topics in MDPI journals
Prof. Dr. Xiao-Guang Yue

E-Mail Website
Guest Editor
Department of Computer Science and Engineering, European University Cyprus, Nicosia 1516, Cyprus
Interests: intelligent information processing; mathematical analysis; interdisciplinary applications of mathematical theory
Special Issues, Collections and Topics in MDPI journals

Special Issue Information

Dear Colleagues,

Emerging market multinational enterprises (EMNEs) have become important players in international business, and their internationalizations have contributed a significant amount of foreign direct investments (FDIs) to the global economy. However, the ongoing trade war between the world’s two largest economies—the United States and China—has been challenging for EMNEs since 2018. The spread of COVID-19 has further impeded international business operations. It is critical for researchers to understand the impact of this volatile environment on the internationalizations of EMNEs.

Compared to multinational enterprises from developed economies, EMNEs tend to have different strategic goals and circumstances in their internationalizations. Conventional business practices based on networks and knowledge to achieve international success might not apply to EMNEs’ FDIs in a turbulent global environment. Although EMNEs tend to adopt aggressive strategies due to their apparent tolerance for host country institutional risk, limited existing literature links strategies to distinctive risk management in a volatile environment.

This Special Issue focuses on the broad topic of “Internationalization of Emerging Market Multinational Enterprises in a Volatile Environment” and aims to include novel research on EMNEs, FDIs, host country institutional risk, internationalization, risk management, risk tolerance, strategic configuration, and volatile environments.

Dr. Yi Li
Dr. Yifan Zhong
Dr. Xuefeng Shao
Prof. Dr. Xiao-Guang Yue
Guest Editors

Manuscript Submission Information

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Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Journal of Risk and Financial Management is an international peer-reviewed open access monthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 1400 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

  • Emerging market multinational enterprise
  • Foreign direct investment
  • Host country institutional risk
  • Internationalization
  • Risk management
  • Risk tolerance
  • Strategic configuration
  • Volatile environment

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Published Papers (9 papers)

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Editorial

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4 pages, 199 KiB  
Editorial
Home Countries Matter for the Internationalisation of Emerging Market Multinational Enterprises
by Yifan Zhong, Ruosu Gao and Xiao-Guang Yue
J. Risk Financial Manag. 2022, 15(2), 46; https://doi.org/10.3390/jrfm15020046 - 20 Jan 2022
Cited by 4 | Viewed by 2566
Abstract
The past two decades have witnessed the significant growth of emerging markets and the rise of emerging market multinational enterprises (EMNEs) (Luo and Tung 2007) [...] Full article
(This article belongs to the Special Issue Internationalization of Emerging Market Multinational Enterprises in a Volatile Environment)

Research

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12 pages, 2631 KiB  
Article
Distributed Ledger Technology (DLT): A Game Changer for MNEs in Emerging Markets
by Tamir Agmon and Ido Kallir
J. Risk Financial Manag. 2022, 15(12), 580; https://doi.org/10.3390/jrfm15120580 - 6 Dec 2022
Cited by 1 | Viewed by 1888
Abstract
Global trade determines how we live. Technology determines the extent of the market and the ease of trade. The transportation revolution reduced costs and cut travel times. The communication revolution (ICT) improved the quality and quantity of information in the global market and [...] Read more.
Global trade determines how we live. Technology determines the extent of the market and the ease of trade. The transportation revolution reduced costs and cut travel times. The communication revolution (ICT) improved the quality and quantity of information in the global market and cut the cost of global trade in goods and services, including labor. Global trade has become a B2B market wherein multinational enterprises (MNEs) are major players. While MNEs began as major companies in developed countries, their success in importing labor from the emerging market through production of consumer goods in the developed countries led to emerging MNE markets. In an earlier paper on MNEs in emerging markets, Agmon suggested that blockchains reduce the cost of using the global price mechanism, and both production and consumption decisions can be made by individuals in a global market. In this paper, we discuss the case of the multinational industry of venture capital-supported small start-ups, wherein individuals with ideas for better goods, production processes, and services approach capital markets in major countries for financing their ideas. The accompanying distributed ledger technology (DLT) takes global trade a step further by opening up the possibility of global trade among individuals and loosely organized, task-oriented groups of individuals located in both developed and emerging economies. In a DLT world with decentralized markets, no transaction costs, and perfect information, the key to global trade will lie in the capabilities of the individual, or a specific task-oriented, loosely organized group of individuals. Small countries are finding it increasingly difficult to compete in international markets. We seek to examine whether the conceptual framework of DLT, when implemented in a small country that chooses to export ideas rather than products, thereby eliminating the need for a complex supply chain, can be the first empirical example of the DLT concept as a “game changer”. The experience of the Israeli VC industry points to exciting potential through the application of the mindset and the unique legal and financial structures of the “start-up nation”, wherein an economy was created that relies on small and frequently changing high-tech firms. In a country where VC investment capital is entirely imported, there is more room for investment in DLT technologies. Such an economy is compatible with the DLT concept and provides a unique empirical example of the DLT technological change’s effect on the economy of a small country. Full article
(This article belongs to the Special Issue Internationalization of Emerging Market Multinational Enterprises in a Volatile Environment)
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17 pages, 301 KiB  
Article
Should Firms in Emerging Markets Invest in R&D? Evidence from China’s Manufacturing Sector
by Dachen Sheng and Heather Montgomery
J. Risk Financial Manag. 2022, 15(11), 517; https://doi.org/10.3390/jrfm15110517 - 7 Nov 2022
Cited by 3 | Viewed by 1836
Abstract
Analyzing micro-level firm data from the Chinese manufacturing sector, this study provides compelling evidence that firms in emerging markets that invest in research and development (R&D) for product differentiation significantly increase firm performance as measured by market power, profitability, and earning quality. Privately [...] Read more.
Analyzing micro-level firm data from the Chinese manufacturing sector, this study provides compelling evidence that firms in emerging markets that invest in research and development (R&D) for product differentiation significantly increase firm performance as measured by market power, profitability, and earning quality. Privately held (non-state-owned), mid-size, Shenzhen exchange-listed firms experience the largest boost to firm performance when they invest in research and development. However, analyzing the contribution of R&D investment to firm market value, we reveal that while R&D investments are valued by institutional investors, the potential for investment in R&D to boost firm performance is not recognized by individual investors, who dominate Chinese financial markets. This finding suggests that managers may under-invest in R&D if equity compensation comprises a large share of the overall compensation package. Full article
(This article belongs to the Special Issue Internationalization of Emerging Market Multinational Enterprises in a Volatile Environment)
19 pages, 329 KiB  
Article
Extending Uppsala Model with Springboard Perspective in Emerging Multinational’s Sequential Internationalisation—Evidence from a Construction Company’s Expansion in Africa
by Ruosu Gao, Qiuling Gao, Xiaolin Zhuang and Kaiyang Sun
J. Risk Financial Manag. 2022, 15(1), 16; https://doi.org/10.3390/jrfm15010016 - 4 Jan 2022
Cited by 4 | Viewed by 6993
Abstract
The Uppsala model explains the traditional internationalisation process of multinational enterprises (MNEs), which gradually begin to internationalise from countries with smaller psychic distances. However, in the turbulent global economy, an increasing number of MNEs from emerging markets (EMNEs) adopts a more radical and [...] Read more.
The Uppsala model explains the traditional internationalisation process of multinational enterprises (MNEs), which gradually begin to internationalise from countries with smaller psychic distances. However, in the turbulent global economy, an increasing number of MNEs from emerging markets (EMNEs) adopts a more radical and aggressive approach, strategically using international expansion as a springboard to enter an overseas market and radiate surrounding countries and regions. By combining the springboard perspective and the Uppsala model, we analyse a series of processes from EMNE’s first entry into an overseas market to the successful localisation and expansion of international business. This radical model of international expansion has not been thoroughly studied. This empirical study aims to address this research gap by using a qualitative method and an in-depth case study. This paper conducted a semi-structured interview with 16 expatriates, executives, and middle-level managers from the case company in 2016. As one of the few single case studies that systematically studies the internationalisation process of EMNEs and provides first-hand empirical evidence, it contributes to practice and provides a contextual reference for EMNEs. Full article
(This article belongs to the Special Issue Internationalization of Emerging Market Multinational Enterprises in a Volatile Environment)
24 pages, 1210 KiB  
Article
Cross-Border M&A Motives and Home Country Institutions: Role of Regulatory Quality and Dynamics in the Asia-Pacific Region
by Peter Zámborský, Zheng Joseph Yan, Erwann Sbaï and Matthew Larsen
J. Risk Financial Manag. 2021, 14(10), 468; https://doi.org/10.3390/jrfm14100468 - 3 Oct 2021
Cited by 9 | Viewed by 5037
Abstract
The purpose of this paper is to analyze the relationship between home country institutions and cross-border merger and acquisition (M&A) motives of MNEs from the Asia-Pacific region, with a focus on the role of regulatory quality and dynamics. We empirically examine how M&A [...] Read more.
The purpose of this paper is to analyze the relationship between home country institutions and cross-border merger and acquisition (M&A) motives of MNEs from the Asia-Pacific region, with a focus on the role of regulatory quality and dynamics. We empirically examine how M&A motives are affected by elements related to risk of the institutional environment of the acquiring firm’s home country regulatory quality over time. The study is grounded in the general theory of springboard MNEs, and the institutional views of cross-border operations, namely the institutional escapism and institutional fostering perspectives. Using data on over 700 cross-border M&As of European firms by Asia-Pacific MNEs in 2007–2017, we analyze the rationales for these deals and their relationship to the institutional characteristics of the buyers’ home countries including regulatory quality and voice and accountability. We found that the quality of home country regulatory environment is significantly related to domestic firms’ motivation for international M&As. However, the significance and sign of the effects differ for different types of motives and over time. Our findings contribute to the literature on general versus emerging MNE-specific internationalization theories (particularly the theory of springboard MNEs) by expounding on the types and dynamics of cross-border M&A motives. Full article
(This article belongs to the Special Issue Internationalization of Emerging Market Multinational Enterprises in a Volatile Environment)
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18 pages, 652 KiB  
Article
Customer Value Creation for the Emerging Market Middle Class: Perspectives from Case Studies in India
by Rifat Sharmelly and Anton Klarin
J. Risk Financial Manag. 2021, 14(10), 455; https://doi.org/10.3390/jrfm14100455 - 23 Sep 2021
Cited by 5 | Viewed by 5162
Abstract
This paper examines the customer value creation framework and discusses the design of the key elements for product development in emerging markets. A scientometric/bibliometric scoping literature review identifies a clear gap in the current research in studying prerequisites for customer value creation in [...] Read more.
This paper examines the customer value creation framework and discusses the design of the key elements for product development in emerging markets. A scientometric/bibliometric scoping literature review identifies a clear gap in the current research in studying prerequisites for customer value creation in emerging market contexts. Observing experiences of Daikin and Renault in the context of India, the purpose of this paper is to identify value creation strategic choices following which comprehensive customer value offerings in products and services can be successfully created by firms across the four facets of the framework in emerging markets. Value creation strategies include having a nuanced understanding of the latent contextual needs to offer localized high-quality products that embody distinct functional attributes that provide a functional value and being responsive to specific emotional needs and epistemic experiences of the target customers in product and service offerings to deliver a greater experiential value. Furthermore, the products should adopt a localized operational excellence strategy throughout the value chain to reduce costs for competitive price offerings in order to deliver superior cost value and develop brand image and equity strategy, thereby allowing for the provision of a greater symbolic value. Experiences of successful firms demonstrate the need for extensive local research into the emerging market followed by localization of production and development of a distribution network to be able to offer customized products at competitive prices whilst maintaining the brand value. We thus extend the customer value creation framework by introducing localization as a necessary condition for successful organizational performance in emerging markets. Full article
(This article belongs to the Special Issue Internationalization of Emerging Market Multinational Enterprises in a Volatile Environment)
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23 pages, 1137 KiB  
Article
A Systems Perspective in Examining Industry Clusters: Case Studies of Clusters in Russia and India
by Anton Klarin, Rifat Sharmelly and Yuliani Suseno
J. Risk Financial Manag. 2021, 14(8), 367; https://doi.org/10.3390/jrfm14080367 - 10 Aug 2021
Cited by 9 | Viewed by 3885
Abstract
This article explores an examination of industry clusters from a systems perspective. We analyze Russia’s pharmaceutical clusters and India’s automobile clusters in terms of the systems concepts of holism, emergence, and open systems. We further consider the aspects of human capital investment and [...] Read more.
This article explores an examination of industry clusters from a systems perspective. We analyze Russia’s pharmaceutical clusters and India’s automobile clusters in terms of the systems concepts of holism, emergence, and open systems. We further consider the aspects of human capital investment and the availability of professional labor, infrastructure, private–public sector collaboration, support for funding and commercialization, as well as innovation corporate culture, when examining the institutional pillars supporting the development and growth of industry clusters within the national innovation ecosystems. The findings illustrate how industry clusters can be viewed from a systems perspective. We also highlight how the institutional pillars underpinning national innovation ecosystems can be applied to an industry cluster level, particularly in emerging countries. The article provides implications for theory and practice in the application of a systems perspective as a way to foster industry cluster innovation and promote a more effective national innovation ecosystem. Full article
(This article belongs to the Special Issue Internationalization of Emerging Market Multinational Enterprises in a Volatile Environment)
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23 pages, 315 KiB  
Article
Expatriate Management of Emerging Market Multinational Enterprises: A Multiple Case Study Approach
by Yifan Zhong, Jiuhua Cherrie Zhu and Mingqiong Mike Zhang
J. Risk Financial Manag. 2021, 14(6), 252; https://doi.org/10.3390/jrfm14060252 - 7 Jun 2021
Cited by 7 | Viewed by 9229
Abstract
Expatriate management has evolved through the practices of developed economy multinational enterprises (DMNEs), with the aim of improving expatriate adaptability, cross-cultural adjustment, and performance. However, most of these studies focus on expatriates from developed countries and try to help DMNEs instead of emerging [...] Read more.
Expatriate management has evolved through the practices of developed economy multinational enterprises (DMNEs), with the aim of improving expatriate adaptability, cross-cultural adjustment, and performance. However, most of these studies focus on expatriates from developed countries and try to help DMNEs instead of emerging market MNEs (EMNEs). In a turbulent global economy, how EMNEs manage their expatriates when conducting business through their outward foreign direct investment (FDI) is understudied. This empirical study aims to address this research gap by utilising a qualitative approach and a multiple case study. It has conducted semi-structured interviews with expatriates, executives, and middle managers of Chinese MNEs in 2014. It contributes as one of the few to systematically examine expatriate related issues in the context of EMNEs with first-hand empirical evidence. The findings show that EMNEs are leapfrogging with their internationalisation and hence their expatriate policies are often ad hoc without systematic planning. Moreover, this study has contributed to practice, especially to EMNEs, regarding the way they need to improve their expatriate policies and practices. Full article
(This article belongs to the Special Issue Internationalization of Emerging Market Multinational Enterprises in a Volatile Environment)

Review

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22 pages, 1791 KiB  
Review
Determinants of EMNEs’ Entry Mode Decision with Environmental Volatility Issues: A Review and Research Agenda
by Yameng Li, Ruosu Gao and Jingyi Wang
J. Risk Financial Manag. 2021, 14(10), 500; https://doi.org/10.3390/jrfm14100500 - 18 Oct 2021
Cited by 6 | Viewed by 3779
Abstract
Emerging market multinational enterprises (EMNEs) play a vital role in global economic development and usually adopt aggressive internationalization strategies. However, the volatile global environment has caused EMNEs to face various risks in their overseas expansion. To maximize the competitive advantages and achieve successful [...] Read more.
Emerging market multinational enterprises (EMNEs) play a vital role in global economic development and usually adopt aggressive internationalization strategies. However, the volatile global environment has caused EMNEs to face various risks in their overseas expansion. To maximize the competitive advantages and achieve successful expansion, EMNEs should choose the most suitable foreign entry mode. Therefore, EMNEs need to understand what environmental factors affect their decision-making and how they influence the choice of entry modes, especially in a volatile environment. This review examines 44 selected journal articles from 1996 to June 2021 on the environmental volatility determinants of EMNEs’ entry mode choice. The entry mode choice we examined is mainly wholly-owned subsidiary versus international joint venture. We categorized the environmental volatility determinants investigated in the literature we reviewed into country-level factors (such as cross-national distance) and industry-level factors (such as industry condition). The main contributions are: (1) the review reveals three research gaps in extant studies, which are lack of research on external environmental factors, lack of research on multinationals from less concerning emerging economies, and lack of research on small-to-medium (SMEs) enterprises. (2) Practically, the study highlights the importance of understanding external environmental factors for EMNEs to make the most suitable entry mode decisions. Full article
(This article belongs to the Special Issue Internationalization of Emerging Market Multinational Enterprises in a Volatile Environment)
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