1) compete with existing rivals and overcoming their

 

1)     Differences between EMNEs and developed (300-400
words)

 

It is evident that EMNEs has definite differences in
advantages as compared to traditional MNEs. The rapidly growing and substantial
local markets has offered them platform and cash to expand internationally.

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However, EMNEs face several disadvantages as compared to traditional
multinationals due to weak institutional environment and market constraints in
their home countries (Ramamurti and Singh, 2009). This led to
EMNEs facing lack of technological-based ownership advantages and managerial
capabilities (Ramamurti and Singh, 2009). 

 

Albeit the assertion that developed multinationals
hold better ownership advantages such as technological advancement, EMNEs shows
higher degree of trans-nationality by means of larger shares of incomings and
employees abroad. Ramamurti and Singh (2009) study shows that many EMNEs from
Brazil and South Africa boasted significant cash flows due to high prices
offered for their countries’ raw minerals hence they were able enjoy ready
access to these resources due to their home country’s advantages. Awuah and
Anderson (2013) additionally state that EMNEs are theoretically different in
respect of comparative advantage because of their latecomer standing. As a
result, EMNEs are seen to utilize international expansion as a springboard to
acquire strategic resources to compete with existing rivals and overcoming
their latecomer status (Ramamurti, 2012). Hence, EMNEs
typically ply on fast pace of internationalization, which involve aggressive
and risk-taking acquisition to facilitate swift transfer of strategic assets
with the aim to remain internationally competitive (Awuah and Anderson,
2013).

Matthews (2006) further suggests that through these acquisitions, EMNEs were
able to acquire accumulated capabilities over time such as economies of
scale. 

 

 

2)     Emerging multinationals and OLI Framework
(200-400 words)

 

In the light of the recent aggressive
internationalization of EMNEs, the OLI framework has unfortunately faced several
criticisms on whether these conditions remain of theoretical applicability to
explain EMNEs’ investment decisions and practices (Matthews, 2006).

 

Fundamentally, EMNEs do not have the same competitive
advantages as compared to traditional MNES. Matthews (2002) indicated that
EMNEs lacks ownership advantages hence they are internationalizing in order to
achieve these advantages. In Goldstein & Pusterla research (2010), it was
pointed out that China EMNEs relied heavily on locational advantages such as
minerals in Brazil and not on the basis of the ‘O’ in the framework. This led
to the notion that EMNEs face the absence of ownership advantages, which
constitute the main rationale of traditional MNEs expanding internationally (Matthews,
2006). This is because EMNEs engage in asset exploration by home augmentation instead
of home exploitation in order to obtain access to strategic or unique resources
so as to overcome initial resource impediments (Eden and Dai,
2010).

This indisputably contradicts the OLI framework, which requires firms to
possess pertinent ownership advantages that overweigh the cost of competing
abroad (Tsui, 2007).

 

Despite the criticism, Dunning (2006) accepted that
EMNEs face a shortfall in ownership advantages but suggested that ownership
advantages on the other hand can be stemmed through the nationality of these
EMNEs’ firm whereby country-specific factors can be reinforced into their
ownership advantages. Additionally, the framework is criticized as static as it
only takes into consideration pre-existent advantages and does not elaborate on
the accumulated advantages and experience garnered from international market
involvement (Moon and Rohel, 2001). It is
concurred that OLI framework is not suitable to clarify firm activities at
micro-level (Matthews, 2006). However, the framework is still useful as a first
point of orientation for emerging market multinationals, as it is adequately
robust in elucidating the structure of the economic system at macro-level (He and Wong, 2004).

 

 

 

 

 

 

 

3)     Uppsala Framework

 

The Uppsala model was contrived to discern how
international operations of firms were developed in incremental stages and at
the same time demarcating decision-making processes to expand internationally (Johanson and Vahlne, 2006). The Uppsala
model is built upon the concept of market knowledge as it encompasses
step-to-step learning and knowledge appropriation process in conjunction with foreign
market and its operation (Johanson and Vahlne, 2006). Frynas and
Mellahi (2015) advocate this view indicating that firm should garner good
knowledge accumulation and learning as it offers better comprehension of
prospects and risks of continual market involvement. Market commitment is
another essential aspect of the model in which company expanding abroad is
required to carefully allocate appropriate resources or assets to the foreign
market and usually EMNEs are required to have higher commitment (Frynas and Mellahi, 2015). As both
market knowledge and commitment are relatively comparable and connected, one
decision will become input for subsequent decision (Forsgren,
2002).

Thus, the more the firm gather knowledge about the foreign market, the lower
the existence of perceived risk and there will be high commitment and
investment in that market (Forsgren, 2002). As a result,
the Uppsala explains how firms internationalize progressively and cautiously as
it is built based on incremental decisions.

 

The model also highlights the significance of
psychic distance that is described as factors that prevent or derange firms from
learning or understanding the foreign environment (Johanson and Vahlne, 2009). Factors can
be differences in business practices, language or culture. It is also assumed
that firms should expand into markets that are closer to their home country. Therefore,
psychic distance influences firm’s market selection (Johanson and Vahlne, 2009).

 

Despite the gradual stages and concepts that the
model entails, it is still being criticized for being too rigid in light of
their approach during internationalization as the model omits low level of
investment and less risky approaches such as franchising (Ramamurti, 2012). Furthermore, the model explains
the incremental internationalization of firms, which is contrary to the
aggressive acceleration expansion method that EMNEs usually undertake (Ramamurti, 2012). However, the
Uppsala model is able to highlight risks that EMNEs may face which is imperative
to decision-making process (Forsgren, 2002). Frynas and
Mellahi (2015) further indicate that despite the model being too generic in
nature, it is still able to encapsulate issues related to location or strategic
changes, which cover essential contextual aspects of companies expanding
internationally.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4)     LLL Model

 

The linkage, leverage, learning (LLL) model was
originated due to the critics faced by the OLI framework as it advocates the
asset exploration motive that is seen as a springboard perspective (Matthews, 2002). Matthew (2006) developed this
model to provide pivotal understanding to the accelerated internationalization
decisions of EMNEs through resource-based analysis.

 

The first aspect is linkage, which understands
how companies decide to leverage into new markets. EMNEs are viewed as
latecomers hence linkage is a mechanism that provides them with apt and readily
access to internally lacked assets such as advanced technology or brand
reputation through collaborative partnership with foreign firms (Luo and Tung, 2007). Prevalence
of risk due to uncertainty in the market is reduced often through partnership thus
it is a popular strategic decision that is implemented by Chinese EMNEs (Morck, Yeung and Zhao, 2008). The second feature,
leverage, concentrates on the exploitation of linkage by funneling resources
and cost advantages together by overcoming impediments and barriers in order to
remain internationally competitive (Matthews, 2002). Lastly,
learning is a stage established when EMNEs acquire competitive advantages and
dynamic capabilities through linkage and leverage strategies and attain
knowledge on how to compete on international level (Matthews, 2006).

 

 

He and Fallon (2013) illustrate the application
of LLL model analysis on Tata Motors whereby through the acquisition of Jaguar
Land Rover, the company was able to enhance its brand reputation and
technological skills. Furthermore, they were able to leverage their knowledge
to evolve into global players (He and Fallon, 2013).

 

Therefore, the LLL model is able to furnish
strategic intents of EMNEs as well as providing account for the rapid rise of
EMNEs (Matthews, 2006). Hence, the theory reckoned that
any EMNEs, which lack strategic resources, have the possibility to internationalized
in an accelerated manner through integration of the LLL model (Matthews, 2002).

 

 

 

 

 

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