Emerging market MNEs as meta-integrators: the importance of internal networks

Abstract

The modern MNE has to be a 'meta-integrator', able to leverage knowledge within and between its different constituent affiliates, which requires efficient internal markets and well-structured cross-border hierarchies. The current generation of EMNEs need to strengthen their ownership advantages to achieve such internal embeddedness, which are hard to acquire, and must be learnt. I frame this discussion in the ongoing debate about the nature of ownership advantages. The ability to be competitive in an era of globalisation depends as much on the EMNE's technological assets as it does on its ability to achieve economies of common governance. The EMNE has to be able to promote internal knowledge flows, both to and from the parent, as well as between affiliates located in different countries. This is essential to achieve organisational, scale and scope economies.

Applying and advancing internalization theory: The multinational enterprise in the twenty-first century

“…The capability to recombine is firm-specific and tacit, not easily acquired or transferred. MNEs require efficient internal markets and well-structured cross-border hierarchies (otherwise, there are limited economies of common governance), and recombination of FSAs are especially significant for successful MNEs to act as 'meta-integrators' that combine knowledge resident within the various constituent units within the firm and extract an advantage from it (Narula, 2017;Madhok, 2015).…”

“…The intangible skills of effectively designing, adapting, and managing complex hierarchies are not easily acquired, and need to be developed through experience. Nascent MNEs (such as emerging economy MNEs) tend not to have the depth of knowledge to achieve economies of common governance, or effectively transfer FSAs to and from different locations (Cuervo-Cazurra, 2012;Narula, 2012Narula, , 2017. The more complex the MNE structure, the more important these skills (Birkinshaw & Pedersen, 2001), which have been termed transaction-type FSAs and denoted O T (Dunning, 1993;Narula, 2014Narula, , 2017.…”

“…Nascent MNEs (such as emerging economy MNEs) tend not to have the depth of knowledge to achieve economies of common governance, or effectively transfer FSAs to and from different locations (Cuervo-Cazurra, 2012;Narula, 2012Narula, , 2017. The more complex the MNE structure, the more important these skills (Birkinshaw & Pedersen, 2001), which have been termed transaction-type FSAs and denoted O T (Dunning, 1993;Narula, 2014Narula, , 2017. Indeed, there is a constant push-pull between the opposing forces promoting centralization and autonomy within the MNE (Young & Tavares, 2004).…”

Digitalized service multinationals and international business theory

“…To handle these types of FDIs not fitting his original model, Dunning added a new type of FSA/ ownership advantage (O t ), which he called ''advantages of common governance'' and which ''arise because of multinationality''. Narula (2014Narula ( , 2017 sees these O t advantages as consisting of a firm's ability to coordinate intra-firm activities and to combine its FSAs with assets owned by external actors (see also Narula, Asmussen, Chi & Kundu, 2019). To the extent that these advantages derive from having successfully internalized the transaction, this is tautological, because this category of FSA can only be observed ex post.…”

The structural reshaping of globalization: Implications for strategic sectors, profiting from innovation, and the multinational enterprise

“…As the process of increasing cross-border integration accelerated during the 1990s, it highlighted the potential for 'diminished national autonomy' in the presence of growing technoglobalism (Ostry & Nelson, 1995). It supposedly also created conditions for the emergence of meta-MNEs (Lessard, Teece, & Leih, 2016), neo-global corporations (Mees-Buss, Welch, & Westney, 2019), and the view that the MNE could be a metaintegrator of knowledge and activities across multiple internal and external boundaries (Narula, 2017). This view assumed the continuation of an open or 'liberal' world economic order with low or no tariffs and investment controls, and respect for the rule-of-law in governance arrangements (Witt, 2019).…”