The Theory and Regulation of Emerging Market Multinational Enterprises

Alan Rugman

Chapter Chapter 5 in Foreign Direct Investments from Emerging Markets, 2010, pp 75-87 from Palgrave Macmillan

Abstract: Abstract In this chapter, we use the logic of international business strategy to demonstrate that examples of worldwide integration are special cases that ignore the empirical realities of multinational enterprises (MNEs). In particular, simplistic thinking on globalization does not apply to MNEs from emerging markets. We briefly review empirical evidence that demonstrates that the world’s largest MNEs (including those from emerging markets) do not operate globally, but sell and produce the vast majority of their output within their home region of the triad. We develop an analytical framework which takes into account country-level and regional-level barriers to integration, and is useful in explaining the activities of MNEs from emerging markets. We explore the nature of the firm-specific advantages (FSAs) of emerging market MNEs but find that most of these firms rely on home country-specific advantages (CSAs) at this stage of their development. We finally apply this framework to issues in public policy toward foreign direct investment (FDI). We conclude that, from the viewpoint of international business strategy, prescriptive thinking is misleading if it is believed that MNEs from emerging markets can follow a global strategy of economic integration and assume market access to North American and European economies. Instead, MNEs from emerging markets need to develop strategies to accommodate the realities of intraregional integration and to overcome increasing host country regulations affecting inward FDI.

Keywords: Foreign Direct Investment; International Business; Multinational Enterprise; North American Free Trade Agreement; Asia Pacific Journal (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-11202-5_5

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DOI: 10.1057/9780230112025_5

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