UNU-MERIT Working Papers Series
Do we need different frameworks to explain infant MNEs from developing countries?
Rajneesh Narula #2011-073Applying 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.
Key words: FDI, MNEs, eclectic paradigm, developing countries, emerging
economies markets.
JEL codes: F23, L52, O14, O19
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