Purpose The purpose of this paper is to explore the extent to which the firm-specific advantages (FSAs) which underlie international expansion have proved resilient for European multinational enterprises (MNEs) operating in a key emerging market – China. Design/methodology/approach The authors adopt a qualitative, case study approach, using interview data to explore the companies’ FSAs on market entry, how they evolved over time and the strategies adopted to defend them. They undertook 15 in-depth interviews with decision makers in six companies addressing their experience since market entry. To control for sector-level effects, the authors focus on companies in the environmental protection sector. Findings The authors found examples of significant erosion of the FSAs among the case study companies, which undermined their position on the host market and their long-term competitiveness. The key sources of erosion were limitations in market access, exclusion from local networks and the emergence and upgrading of local competitors, often firms with whom the MNEs had collaborated in the past. Research limitations/implications The relatively small number of cases (six) limits the generalisability of the findings by the authors. However, the authors are convinced that, given that the case companies are generally large and have long experience in China, the conclusions made are well grounded. In addition, there was the high level of coherence in the reported experiences of the interviewees, providing further support for the findings. Practical implications The experience of these case study companies highlights that MNEs have difficulty retaining their unique FSAs when faced with rapidly evolving local competition in a key emerging market. Key strategies mobilised included focussing on a sub-sector of the market and localising both the company and their supply chains. The difficulties experiencing by these case study companies in retaining their FSAs underline the need for MNEs in emerging markets to avoid complacency and constantly innovate, but they also raise questions about their capacity to extend their international reach in the long term. Originality/value Very few studies have explored the FSAs of firms and how they evolve over time using a case study-based qualitative approach, especially in emerging markets.
Purpose The purpose of this paper is to explore the simultaneous evolution of LOF and AOF in the context of environmental protection (EP) companies from Europe in the Chinese market. Design/methodology/approach The authors adopt a qualitative, case study approach, using interview data to explore the extent of liability of foreignness and how the FSAs of firms have changed from the time on market entry. The authors undertook 15 in-depth interviews with decision makers in six companies addressing their experience of foreignness during their long tenure in China. To control for sector-level effects, the authors focus on companies in the EP sector. Findings The authors found the evolving AOF of the firms were challenged to a significant extent that caused difficulties in reducing their LOF over time. The EP sector is dominated by state-owned enterprises that have unique organized structure preventing localized foreign firms from gaining access into the institutionalized network. This deeply quilted institutionalized network had a corrosive effect in the gradual erosion of the LOF manifested from unfair price strategy practice, forced collaborations, ostracization of project participations, operational barriers, prohibited and restricted market access. The research also uncovered the rebirth nature of LOF that caused AOF to lose its significance across bureaucracy and ownership changed. Research limitations/implications The relatively small number of cases (six) limits the generalizability of the findings by the authors. However, the authors are convinced that, given that the case companies are generally large and have long experience in China, the conclusions made are well grounded. In addition, there was the high level of coherence in the reported experiences of the interviewees, providing further support for the findings. Practical implications The experiences of these case study companies highlight that MNEs need to be vigilant and creative in constantly improving their FSAs so that the competitive distance between them and the local competitors remains substantial. Originality/value Very few studies have explored both assets and liabilities of foreignness in the host country regulatory context using a case study-based qualitative approach, especially in emerging markets.
In furthering the discussion on the linkage between economic development and culture, this chapter attempts to answer the question, “Can culture be modified to advance economic growth?” and uses Singapore as a case in point. It traces the country's restructuring of cultural values to foster economic growth and development, which allowed Singapore to grow from a small island state with a sagging economy and no natural resources to one of the most respected and widely recognized developmental models of the modern era. This study shows that social controls can help newly developing countries in creating political stability and social cohesion that allows for rapid economic development. However, the side effects of such measures lead to the creation of a compliant society that lacks creativity and innovation, is risk averse in entrepreneurial activity, and is prone to talent depletion.
In furthering the discussion on the linkage between economic development and culture, this paper attempts to answer the question: “Can a society's culture be transformed to stimulate economic development?” This paper uses Singapore as a case study. It traces the country's restructuring of cultural values to foster economic growth and development which allowed Singapore to grow from a small island state with a sagging economy and no natural resources, to become one of the most respected and widely recognized developmental models of the modern era. This study shows that social controls can help newly developing countries in creating political stability and social cohesion that allows for rapid economic development. However, the negative effects of such measures lead to the creation of a compliant society that lacks creativity and innovation, is risk averse in entrepreneurial activity, and prone to talent depletion.
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