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

Narula, Rajneesh and Nguyen, Quyen T.K. (2011). Emerging country MNEs and the role of home countries: separating fact from irrational expectations. UNU-MERIT.

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  • Author Narula, Rajneesh
    Nguyen, Quyen T.K.
    Title Emerging country MNEs and the role of home countries: separating fact from irrational expectations
    Publication Date 2011
    Publisher UNU-MERIT
    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 many 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.
    Keyword FDI
    MNEs
    Eclectic paradigm
    Asset-seeking
    Knowledge flows
    Emerging markets
    JEL F23
    L52
    O14
    O19
    Copyright Holder UNU-MERIT
    Copyright Year 2011
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    Created: Wed, 11 Dec 2013, 16:14:58 JST