The categories “emerging” and “advanced” multinationals gloss over the “middleness” of multinationals from and even in middle-income countries. Middle-income countries face weaker institutions and smaller markets than high-income countries, but conditions are better than in low-income, typically least developed countries. Similarly, skills levels and wages are higher than in low-income countries, but lower than in high-income countries. We argue that this “middleness” matters. Emerging multinationals leverage their position in the global economic hierarchy as brokers working with lead firms, local optimizers operating only downstream, specialist niche providers working only upstream, and sometimes global consolidators operating across the hierarchy. Advanced multinationals use the global economic hierarchy to expand as lead firms in global value chains or pecking order exploiters that enter low-income countries through middle-income countries. Our research, using evidence from South African multinationals, expands our understanding of multinationals’ operations, especially in Africa.
Institutions matter and play a critical role in the function of markets and society as a whole, in developed economies, as well as in emerging and developing economies. There are, however, observed differences in the characteristics, operations, and maturity of institutions across economy types. We draw on qualitative evidence from six advanced economy (AMNE) and emerging economy MNEs (EMNE) operating in Uganda and quantitative evidence from fifteen South African EMNEs operating across Africa to argue that the wide-scale reality of institutional environments that differ from those in the developed West should not necessarily imply institutional voids.
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