International activities of emerging market firms: a critical assessment of research in top international management journals.
| Verfasser | Jormanainen, Irina |
| Posten | RESEARCH ARTICLE |
Abstract:
* During the last decade emerging market firms (EMFs) have increasingly attracted scholarly attention. Yet, the conclusions concerning the nature and the theoretical foundations of EMFs' international expansion vary greatly thus calling for a critical assessment of the existing theorizing in this field.
* We examine publications on the internationalization of EMFs in fourteen top international management (IM) journals in the period of 2000-2010 and use the inductive approach and the qualitative content analysis methodology.
* Our analysis shows that the published research can be classified into two groups: macro- and micro-level studies. The former predominantly employ macro-level institutional factors to examine the overall patterns of EMFs' international expansion, while the latter build on a wider range of approaches, including the resource-based view, network and strategy perspectives to investigate various aspects of EMFs' internationalization.
* The paper identifies a number of theoretical inconsistencies in the existing research that arguably cause ambiguity in findings and suggests future research directions to address these inconsistencies. By doing so the analysis contributes to the central debate in literature concerning whether conventional theories suffice to explain the EMFs' internationalization or new theoretical approaches are needed.
* The analysis illustrates that the research on EMFs' internationalization can be improved through refined application of a broader range of methodologies such as longitudinal and mixed-method studies. The geographic locus of studies needs to be widened as well. Currently it is clearly biased towards China, while other emerging markets remain under-researched.
Keywords: Emerging market firms (EMFs). Internationalization * Content analysis * Top IM journals
Introduction
Firms from developing economies had already undertaken their first steps to go abroad in the early 1980s and in 1990s. These steps have been documented in the literature as the "first wave" (Lall 1983: Lecraw 1977) and the "second wave" (Lecraw 1993; Tolentino 1993) of international expansion respectively. However, it was not until the beginning of the 2000s that emerging market firms (EMFs) rapidly increased the scale of their international activities (OECD 2006; UNCTAD 2006). The emergence of such players as Lenovo and Huawei from China, Tata Group and Infosys from India and many others in the global business arena has challenged the conventional views on the weak competitiveness of emerging market firms (EMirs) shared by the business and academic communities and has undermined the global dominance of long established firms from developed countries (Bonaglia et al. 2007: Buckley et al. 2008; The Economist 2007). Furthermore, the economic crisis of the late 2000s resulting in a serious slow down in the developed world's economic activity has further strengthened the expectation that EMFs will become global 'economic engines" in the next decade (The Economist 2010a).
Hence, the international expansion of EM Fs is clearly a very topical and rapidly evolving phenomenon which is of high importance and interest not only for academics, but also for business practitioners, policy makers and society at large in both developing and developed countries. However, the existing academic discussion of this phenomenon still lacks focus and common theoretical ground and, thus, provides inconclusive results. While some scholars perceive EMFs as serious players able to challenge firms from developed countries (Demirbag et al. 2009: Luo and Tung 2007), others argue that the seriousness of this claim is exaggerated and based on selective anecdotal evidence (e.g., Collinson and Rugman 2007). In other words, more knowledge and theorizing is needed in order to draw more objective conclusions: whether EMFs represent a novel species of firms, the internationalization of which requires new theoretical approaches to be comprehended, or existing international theories may, albeit with some possible extensions, be adequate to explain this phenomenon.
Focus of the Study
In our view, it is a good moment to 'step back' and examine what and how theoretical concepts and approaches were applied to explain the internationalization of EMFs in order to analyze the main results as well as inconsistencies in the existing theorizing. The value of conducting reviews has been acknowledged in a number of research areas as a means to providing an overview and evaluation of the areas in question (e.g., Brauer 2006; Egri and Ralston 2008; Quer et al. 2007). To achieve our objective, we critically assessed publications on international expansion of EMFs in fourteen top international management (IM) journals published between 2000 and 2010. By exclusively focusing on top journals we followed the assumption that these journals are the main disseminators of the knowledge that becomes widely accepted in the field of management. Hence, we deliberately left out from the scope of our review various area-focused journals due to their specificity and narrower focus, as well as academic books, due to the fact that they are not generally subjected to the process of blind peer review unlike top journal articles.
We aim at answering three closely interrelated questions: (a) how does the existing IM research theorize about the EMFs' international activities; (b) what theoretical inconsistencies can be identified in this field; and (c) how can our knowledge in this field, and the field itself, be advanced? Overall, we hope to reveal potential inconsistencies and gaps in the existing theorizing concerning EMFs thus possibly "motivat[ing] management scholars to engage with the topic in [more refined and to some extent] different ways than they have in the past" (LePine and Wilcox-King 2010, p. 507) by suggesting several future research avenues.
Methodology
In order to examine the posed research questions we used the inductive approach and the qualitative content analysis as our analytical lens (Duriau et al. 2007; Welch et al. 2011). The inductive nature of the analysis implies that we departed from the overall recognition of the importance and relevance of the rapidly developing phenomenon of international expansion of EMFs and the existence of often controversial and inconclusive assumptions in various streams of literature regarding its nature. This has guided us to a decision to examine the state of the field in the top IM journals, i.e. the primary source of widely accepted academic knowledge. Next, we chose the qualitative content analysis as it offers the possibility for interactive conceptual development and a holistic interpretation of a text, e.g. academic articles (Welch et al. 2011). This methodology allowed us to investigate 'how' this phenomenon has been addressed in top IM journals, i.e. 'how' IM scholars have examined the topic and 'what' are the main findings to date. Following the suggestion by Duriau et al. (2007) our research design consisted of several methodological steps to ensure the reliability of the analysis, namely defining the concepts, defining the research area and the database for the analysis, selecting texts to be analyzed, analyzing the data, and, finally, interpreting the results. Below we explicate these steps in more detail.
Defining the Concepts: Emerging Markets and Emerging Markets Firms--What are They?
The first methodological step is to delineate the phenomenon under the investigation by making explicit decisions about definitions to allow for a clear description of the research focus. While aiming to explain what is known about the phenomenon, we need to explicate what the phenomenon is. As the boundaries of the phenomenon of EMFs' internationalization in the literature are rather blurred, we believe that by providing a clear definition of the phenomenon we can show what it actually constitutes (see Welch et al. 2011). Hence, to conceptually justify the choice of articles that were considered for this review, we provide the definitions of what we mean by 'emerging markets' and 'emerging markets firms'.
First, we adopt Luo and Tung's (2007, p. 482) definition of 'emerging markets' described as markets that "have undergone significant structural transformation in the recent past ... represent[ing] countries whose national economies have grown rapidly, where industries have undergone and are continuing to undergo dramatic structural changes, and whose markets hold promise despite volatile and weak legal systems". We acknowledge the fact mentioned elsewhere (e.g., Gammeltoft et al. 2010, p. 95) that "emerging and developing economies constitute a tremendously diverse population of countries" implying that "generalizations across the group of countries should only be asserted with the utmost caution". At the same time, the same authors, as well as others (e.g., Luo and Tung 2007), agree that emerging markets do share a number of features that sets them apart from their developed world counterparts. And it is this common element that we are interested in. Thus, for the purposes of the review we treated firms from different emerging markets as equal.
Because there are several classifications of countries that belong to emerging markets, developing markets and transition markets (see for instance such classifications by UNCTAD 2006; FTSE index 2010; MSCI Barra index 2010), for the purposes of this study we decided to focus on what countries to exclude rather than what countries to include. So we excluded 28 countries which the International Monetary Fund (IMF) classified in the year 2000 (the beginning of the period of our review) as advanced economies: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong-Kong, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Malta, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, Taiwan, United...
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