Country of origin institutional factors and internationalization of multinational companies in emerging markets: a review and future research agenda

Fabiane Fidelis Querino; Antônio Cleber da Silva; Mozar José de Brito; Cristina Lelis Leal Calegario; Francisval De Melo Carvalho

doi:10.5585/2023.22718

Authors

Fabiane Fidelis Querino Universidade Federal de Lavras / MG https://orcid.org/0000-0002-6983-4658
Antônio Cleber da Silva Universidade Federal de Lavras / MG https://orcid.org/0000-0003-1717-0324
Mozar José de Brito Universidade Federal de Lavras / MG https://orcid.org/0000-0001-9891-9688
Cristina Lelis Leal Calegario Universidade Federal de Lavras / MG https://orcid.org/0000-0003-2579-8744
Francisval De Melo Carvalho Universidade Federal de Lavras / MG https://orcid.org/0000-0002-4223-5444

DOI:

https://doi.org/10.5585/2023.22718

Keywords:

internationalization, institutional factors, integrative review, multinational companies

Abstract

Different countries have different institutional levels due to the evolution and complexity of institutions. Although there is a lot of research available, the analysis of how institutional factors influence the internationalization process is disconnected, so this article has three main objectives: (1) to map the field and identify the main research streams and their conclusions; (2) propose an integrative framework to analyze the institutional factors driving the internationalization process of companies; and (3) develop a future research agenda to identify opportunities and trends for future studies. For this, an integrative literature review was developed, with 33 articles in the sample. These articles were divided into four lines of research: developed countries, developing countries, regional level, and small and medium enterprises. Government support was the only common factor among these four categories identified as motivators for internationalization.

Downloads

Download data is not yet available.

Author Biographies

Fabiane Fidelis Querino, Universidade Federal de Lavras / MG

Doutoranda em Administração na área de Estrátegia de Negócios Globais e Finanças Corporativas pela Universidade Federal de Lavras (UFLA). Mestre em Administração na área de Gestão de Negócios, Economia e Mercados pela Universidade Federal de Lavras (UFLA). Possui graduação em Ciências Econômicas com ênfase em Controladoria (2018) e em Bacharelado Interdisciplinar em Ciência e Economia (2016) pela Universidade Federal de Alfenas (UNIFAL-MG).

Antônio Cleber da Silva, Universidade Federal de Lavras / MG

Bacharel, Especialista e Mestre em Administração. Doutorando em Administração pela Universidade Federal de Lavras. Atualmente é professor efetivo do Instituto Federal do Sudeste de Minas Gerais - Campus São João Del Rei, onde leciona nos cursos técnicos e tecnólogos. Coordenador do Curso Superior em Tecnologia em Gestão de Recursos Humanos. Tem interesse pelas áreas de Agronegócios, Custos e Administração Financeira.

Mozar José de Brito, Universidade Federal de Lavras / MG

Possui graduação em Administração pela Universidade Federal de Lavras (1988), mestrado em Administração pela Universidade Federal de Lavras (1993) e doutorado em Administração pela Universidade de São Paulo (2000). Atualmente, ocupa o cargo de Professor Titular e Permanente do PPGA/UFLA, atua como consultor ad hoc do CNPQ, CAPES e FAPEMIG e de diversos periódicos, membro do Conselho de Pesquisa, Ensino e Extensão (CEPE-UFLA), coordena grupo e projeto de pesquisas e ministra aulas na graduação, mestrado e doutorado em Administração, participou da Câmara PCRH da FAPEMIG na condição de membro efetivo e coordenador de 01/03/2019 a 28/02/2022.

Cristina Lelis Leal Calegario, Universidade Federal de Lavras / MG

Doutorado em Economia Aplicada no Departamento de Agricultural and Applied Economics - University of Georgia/USA (2005) e Estágio Sênior financiado pela Capes no Departamento de Management & Global Business na Rutgers University, Newark, NJ/USA (2015-2016). Consultora Ad hoc da Capes. Pesquisadora do CNPq (PQ-2) desde 2015. Professora da Universidade Federal de Lavras com experiência na área de Economia Industrial e Negócios Internacionais.

Francisval De Melo Carvalho, Universidade Federal de Lavras / MG

Possui graduação em Engenharia Agronômica pela Escola Superior de Agricultura de Lavras, atual Universidade Federal de Lavras (1987) e mestrado em Administração Rural pela mesma instituição (1992). Em 2009 concluiu o doutorado no Programa de Pós-graduação em Administração de Empresas da Universidade Presbiteriana Mackenzie na área de concentração Finanças Estratégicas. É Professor Titular da Universidade Federal de Lavras e atual chefe do Departamento de Administração e Economia.

References

Alimov, A., & Officer, M. S. (2017). Intellectual property rights and cross-border mergers and acquisitions. Journal of Corporate Finance, 45, 360–377. https://doi.org/10.1016/j.jcorpfin.2017.05.015

Avioutskii, V., & Tensaout, M. (2016). Does politics matter? Partisan FDI in Central and Eastern Europe. Multinational Business Review, 24(4), 375–398. https://doi.org/10.1108/MBR-07-2015-0028

Baloch, M. S., Saeed, A., Ahmed, I., Oláh, J., Popp, J., & Máté, D. (2018). Role of domestic financial reforms and internationalization of non-financial transnational firms: Evidence from the Chinese Market. Sustainability (Switzerland), 10(11). https://doi.org/10.3390/su10113847

Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of management, 17(1), 99-120.

Berry, H., Guillén, M. F., & Zhou, N. (2010). An institutional approach to cross-national distance. Journal of International Business Studies, 41(9), 1460–1480. https://doi.org/10.1057/jibs.2010.28

Buckley, P. J., Elia, S., & Kafouros, M. (2014). Acquisitions by emerging market multinationals: Implications for firm performance. Journal of World Business, 49(4), 611–632. https://doi.org/10.1016/j.jwb.2013.12.013

Cassia, F., & Magno, F. (2015). Marketing issues for business-to-business firms entering emerging markets an investigation among italian companies in eastern europe. International Journal of Emerging Markets, 10(1), 141–155. https://doi.org/10.1108/IJOEM-09-2010-0078

Chattopadhyay, S., & Bercovitz, J. (2020). When One Door Closes, Another Door Opens. . .for some: Evidence from the Post‐TRIPS Indian Pharmaceutical Industry. Strategic Management Journal. https://doi.org/10.1002/smj.3140

Chen, Y., Zhai, R. R., Wang, C., & Zhong, C. (2015). Home institutions, internationalization and firm performance: Evidence from listed Chinese firms. Management Decision, 53(1), 160–178. https://doi.org/10.1108/MD-05-2014-0311

Chen, Z., & Fang, T. (2016). Chinese Returnees and High-Tech Sector Outward FDI: The Case of Changzhou. Asian Economic Papers, 15(3), 195–215. https://doi.org/10.1162/ASEP_a_00470

Cooke, F. L. (2014). Chinese multinational firms in Asia and Africa:

Relationships with institutional actors and patterns of HRM practices. Human Resource Management, 53(6), 877-896.

Contractor, F. J., Lahiri, S., Elango, B., & Kundu, S. K. (2014). Institutional, cultural and industry related determinants of ownership choices in emerging market FDI acquisitions. International Business Review, 23(5), 931–941. https://doi.org/10.1016/j.ibusrev.2014.02.005

Cuervo-Cazurra, A., & Genc, M. (2008). Transforming disadvantages into advantages: Developing-country MNEs in the least developed countries. Journal of International Business Studies, 39(6), 957–979. https://doi.org/10.1057/palgrave.jibs.8400390

Cuervo‐Cazurra, A. (2012). Extending theory by analyzing developing country multinational companies: Solving the Goldilocks debate. Global Strategy Journal, 2(3), 153-167.

Cui, L., & Jiang, F. (2012). State ownership effect on firms’ FDI ownership decisions under institutional pressure: A study of Chinese outward-investing firms. Journal of International Business Studies, 43(3), 264–284. https://doi.org/10.1057/jibs.2012.1

De Beule, F., & Zhang, H. (2022). The impact of government policy on Chinese investment locations: An analysis of the Belt and Road policy announcement, host-country agreement, and sentiment. Journal of International Business Policy, 1-24.

Deng, P., & Yang, M. (2015). Cross-border mergers and acquisitions by emerging market firms: A comparative investigation. International Business Review, 24(1), 157–172. https://doi.org/10.1016/j.ibusrev.2014.07.005

Dow, D., & Karunaratna, A. (2006). Developing a multidimensional instrument to measure psychic distance stimuli. Journal of International Business Studies, 37(5), 578–602. https://doi.org/10.1057/palgrave.jibs.8400221

Elango, B., & Pangarkar, N. (2020). Home country institutional impact on the choice of direct vs indirect exports: an emerging markets perspective. International Marketing Review, 38(2), 387–411. https://doi.org/10.1108/IMR-09-2019-0231

Elango, B., & Pangarkar, N. (2021). Home country institutional impact on the choice of direct vs indirect exports: an emerging markets perspective. International Marketing Review, 38(2), 387-411.

Elmoez, Z., Zorgati, I., & Alessa, A. A. (2021). Cultural Distance and Corporate Internationalization: Evidence from Emerging Economies. Journal of Asian Finance, Economics and Business, 8(3), 267–275. https://doi.org/10.13106/jafeb.2021.vol8.no3.0267

Erel, I., Liao, R. C., & Weisbach, M. S. (2012). Determinants of Cross-Border Mergers and Acquisitions. Journal of Finance, 67(3), 1045–1082. https://doi.org/10.1111/j.1540-6261.2012.01741.x

Ferreira, M. P., & Falcão, M. B. (2019). The impact of CAGE institutional

distances and motivations for internationalization on the brazilian foreign direct investment outflows. Brazilian Business Review, 16(2), 154–173. https://doi.org/10.15728/bbr.2019.16.2.4

Florida, R. (1997). The globalization of R&D: Results of a survey of foreign-affiliated R&D laboratories in the USA. Research Policy, 26(1), 85–103. https://doi.org/10.1016/s0048-7333(97)00004-8

Gaffney, N., Karst, R., & Clampit, J. (2016). Emerging market MNE cross-border acquisition equity participation: The role of economic and knowledge distance. International Business Review, 25(1), 267–275. https://doi.org/10.1016/j.ibusrev.2015.05.005

Gammeltoft, P., Filatotchev, I., & Hobdari, B. (2012). Emerging multinational companies and strategic fit: A contingency framework and future research agenda. European Management Journal, 30(3), 175–188. https://doi.org/10.1016/j.emj.2012.03.007

García-Muiña, F. E., Romero-Martínez, A. M., & Kabbara, D. (2020). Does religion influence location choice in the hotel industry? International Business Review, 29(2), 101663. https://doi.org/10.1016/j.ibusrev.2020.101663

Gaur, A. S., & Lu, J. W. (2007). Ownership strategies and survival of foreign subsidiaries: Impacts of institutional distance and experience. Journal of Management, 33(1), 84–110. https://doi.org/10.1177/0149206306295203

He, W., Ring, P., & Boateng, A. (2016). Bank internationalisation: An examination of the role of government and home institutions in emerging economies. In The political economy of Chinese finance. Emerald Group Publishing Limited.

Hendry, C. (1996). Continuities in Human Resource Processes in. Journal of Management Studies, July.

Hong, J., Wang, C., & Kafouros, M. The Role of the State in Explaining the

Internationalization of Emerging Market Enterprises: Internationalization of Emerging Market Enterprises. British Journal of Management, 26(1).

Huang, X., Chen, H., Wang, L., & Zeng, S. (2020). How Does Leader Narcissism Influence Firm Internationalization? IEEE Transactions on Engineering Management, 67(3), 683–696. https://doi.org/10.1109/TEM.2019.2900169

Jormanainen, I., & Koveshnikov, A. (2012). International activities of emerging market firms. Management International Review, 52(5), 691-725.

Ketkar, S. (2014). The rules of global engagement for developing country firms. Competitiveness Review, 24(2), 124–146. https://doi.org/10.1108/CR-12-2012-0033

Kolk, A., Lindeque, J., & van den Buuse, D. (2014). Regionalization Strategies of European Union Electric Utilities. In British Journal of Management (Vol. 25, Issue SUPPL.1). https://doi.org/10.1111/1467-8551.12015

Kostova, T., & Roth, K. (2002). Adoption of an organizational practice by subsidiaries of multinational corporations: Institutional and relational effects. Academy of Management Journal, 45(1), 215–233. https://doi.org/10.2307/3069293

Kostova, T., & Zaheer, S. (1999). ORGANIZATIONAL LEGITIMACY UNDER CONDITIONS OF COMPLEXITY: THE CASE OF THE MULTINATIONAL ENTERPRISE. Academy of Management Review, 24(1), 64–81.

Lv, P., & Spigarelli, F. (2016). The determinants of location choice: Chinese foreign direct investments in the European renewable energy sector. International Journal of Emerging Markets, 11(3), 333–356. https://doi.org/10.1108/IJOEM-09-2014-0137

Mais, I., & Amal, M. (2011). Determinants of Export Performance: An Institutional Approach. Latin American Business Review, 12(4), 281–307. https://doi.org/10.1080/10978526.2011.633029

Makino, S., Lau, C.-M., & Yeh, R.-S. (2002). Asset-Exploitation Asset-Seeking : Implications for Foreign Newly. Journal of International Business Studies, 33(3), 403–421.

Malhotra, S., Lin, X., & Farrell, C. (2016). Cross-national uncertainty and level of control in cross-border acquisitions: A comparison of Latin American and U.S. multinationals. Journal of Business Research, 69(6), 1993–2004. https://doi.org/10.1016/j.jbusres.2015.10.145

Meyer, A. D. (1982). Adapting to environmental jolts. Administrative Science Quarterly, 27(4), 515–537. https://doi.org/10.2307/2392528

Meyer, K. E., & Thein, H. H. (2014). Business under adverse home country institutions: The case of international sanctions against Myanmar. Journal of World Business, 49(1), 156–171. https://doi.org/10.1016/j.jwb.2013.04.005.

Meyer, K. E., Ding, Y., Li, J., & Zhang, H. (2018). Overcoming distrust: How state-owned enterprises adapt their foreign entries to institutional pressures abroad. In State-Owned Multinationals (pp. 211-251). Palgrave Macmillan, Cham.

Mihailova, I., Shirokova, G., & Laine, I. (2015). New Venture Internationalization from an Emergent Market: Unexpected Findings from Russia. Journal of East-West Business, 21(4), 257–291. https://doi.org/10.1080/10669868.2015.1067276

Navarro, T. M., Durán, F. M., & Santos, J. L. (2017). A regional competitiveness index for Spain | Un índice de competitividad regional para España. Revista de Estudios Regionales, 109, 67–94.

Nguyen, T. V., Le, N. T. B., & Bryant, S. E. (2013). Sub-national institutions, firm strategies, and firm performance: A multilevel study of private manufacturing firms in Vietnam. Journal of World Business, 48(1), 68–76. https://doi.org/10.1016/j.jwb.2012.06.008

Ning, L., Kuo, J.-M., Strange, R., & Wang, B. (2014). International investors’ reactions to cross-border acquisitions by emerging market multinationals. International Business Review, 23(4), 811–823. https://doi.org/10.1016/j.ibusrev.2013.12.003

North, D. (1990). Institutions, institutional change and economic performance. Cambridge, MA: Cambridge University Press.

Opoku-Mensah, E., Yin, Y., Obiora, S. C., & Adjei Darko, P. (2020). Grabbing hand or helping hand? Ownership interventions and acquirers returns; the role of provincial idiosyncrasies. In International Journal of Finance and Economics. https://doi.org/10.1002/ijfe.2401

Peng, M. W., Wang, D. Y. L., & Jiang, Y. (2008). An institution-based view of international business strategy: A focus on emerging economies. Journal of International Business Studies, 39(5), 920–936. https://doi.org/10.1057/palgrave.jibs.8400377

Penrose, E. T. "The theory of the growth often firm." New York: Sharpe (1959).

Pinto, C. F., Ferreira, M. P., Falaster, C., Fleury, M. T. L., & Fleury, A. (2017). Ownership in cross-border acquisitions and the role of government support. Journal of World Business, 52(4), 533–545. https://doi.org/10.1016/j.jwb.2016.08.004

Quer, D., Claber, E., & Rienda, L. (2017). Cultural distance, political risk and location decisions of emerging-market multinationals_ a compar _ Enhanced Reader.pdf. Journal of the Asia Pacific Economy, 22(4), 587–603. https://doi.org/https://doi.or/10.1080/13547860.2017.1312065

Reddy, R. K., Fabian, F., & Park, S. J. (2022). Whether, how and why home country environments influence emerging market firm acquisition behavior. International Journal of Emerging Markets, (ahead-of-print).

Scimago Lab. (2021). SCImago journal & country rank: About us. Acesso em junho 30, https://www.scima gojr.com/about us.php.

Scott, W. R. “Organizations and institutions”. Foundations for

Organizational Science; Sage Publications: Thousand Oaks, CA, USA (1995).

Scully-Russ, E., & Torraco, R. (2020). The Changing Nature and Organization of Work: An Integrative Review of the Literature. Human Resource Development Review, 19(1), 66–93. https://doi.org/10.1177/1534484319886394

Sekliuckiene, J. (2017). Factors leading to early internationalization in emerging Central and Eastern European economies: Empirical evidence from new ventures in Lithuania. European Business Review, 29(2), 219–242. https://doi.org/10.1108/EBR-12-2015-0158

Shirokova, G., & Tsukanova, T. (2013). Impact of the domestic institutional environment on the degree of internationalization of SMEs in transition economies. International Journal of Entrepreneurship and Innovation, 14(3), 193–204. https://doi.org/10.5367/ijei.2013.0121

Silvani, A., & Sirilli, G. (1995). technology policy view. Research Evaluation, 5(1), 69–77.

Stoian, C. (2013). Extending Dunning’s Investment Development Path:

The role of home country institutional determinants in explaining outward foreign direct investment. International Business Review, 22(3), 615–637. https://doi.org/10.1016/j.ibusrev.2012.09.003

Sutton, T., Short, J. C., McKenny, A. F., & Namatovu, R. (2015). Institutional Factors Affecting Expansion within the East African Community: An Analysis of Managers’ Personal Stories. Africa Journal of Management, 1(4), 365–383. https://doi.org/10.1080/23322373.2015.1109850

Torkkeli, L., Kuivalainen, O., Saarenketo, S., & Puumalainen, K. (2019). Institutional environment and network competence in successful SME internationalisation. International Marketing Review, 36(1), 31–55. https://doi.org/10.1108/IMR-03-2017-0057

Torraco, R. J. (2005). Writing Integrative Literature Reviews: Guidelines and Examples. Human Resource Development Review, 4(3), 356–367. https://doi.org/10.1177/1534484305278283

Torraco, R. J. (2016). Writing Integrative Literature Reviews: Using the Past and Present to Explore the Future. Human Resource Development Review, 15(4), 404–428. https://doi.org/10.1177/1534484316671606

Tung, R. L. (2007). The human resource challenge to outward foreign direct investment aspirations from emerging economies: The case of China. International Journal of Human Resource Management, 18(5), 868–889. https://doi.org/10.1080/09585190701249198

UNCTAD (2019), World Investment Report, Investor Nationality: policy challenges, Geneva, United Nations Publication.

Vernon, R. (1979). The product cycle hypothesis in a new international

environment. Oxford bulletin of economics and statistics, 41(4), 255-267.

Viglioni, M. T. D., de Brito, M. J., & Calegario, C. L. L. (2020). Innovation and R&D in Latin America and the Caribbean countries: a systematic literature review. In Scientometrics (Vol. 125, Issue 3). Springer International Publishing. https://doi.org/10.1007/s11192-020-03714-z

Vrontis, D., & Christofi, M. (2021). R&D internationalization and innovation: A systematic review, integrative framework and future research directions. Journal of Business Research, 128(xxxx), 812–823. https://doi.org/10.1016/j.jbusres.2019.03.031

Weston, J. F., & Sorge, B. W. (1972). International managerial finance. McGraw-Hill/Irwin.

World Bank (2020). The Worldwide Governance Indicators (WGI). Washington, DC: World Bank.

Wright, M., Filatotchev, I., Hoskisson, R. E., & Peng, M. (2005). Strategic research in emerging markets: Challenging the conventional wisdom. Journal of Management Studies, 42(1), 1–33.

Wu, J., Wang, C., Hong, J., Piperopoulos, P., & Zhuo, S. (2016). Internationalization and innovation performance of emerging market enterprises: The role of host-country institutional development. Journal

of World Business, 51(2), 251–263.

https://doi.org/10.1016/j.jwb.2015.09.002

Wu, C., Huang, F., Huang, C., & Zhang, H. (2018). Entry mode, market selection, and innovation performance. Sustainability (Switzerland), 10(11). https://doi.org/10.3390/su10114222

Yan, H., Hu, X., & Liu, Y. (2020). The international market selection of

Chinese SMEs: How institutional influence overrides psychic distance. International Business Review, 29(4). https://doi.org/10.1016/j.ibusrev.2020.101703

Yang, J. (2018). Subnational Institutions and Location Choice of Emerging Market Firms. Journal of International Management, 24(4), 317–332. https://doi.org/10.1016/j.intman.2018.04.002

Yaprak, A., Yosun, T., & Cetindamar, D. (2018). The influence of firm-specific and country-specific advantages in the internationalization of emerging market firms: Evidence from Turkey. International Business Review, 27(1), 198-207.

Zhao, M. (2006). Conducting R&D in countries with weak intellectual property rights protection. Management Science, 52(8), 1185–1199. https://doi.org/10.1287/mnsc.1060.0516

Zhu, Y., Sardana, D., & Tang, R. (2022). Heterogeneity in OFDI by EMNEs: Drivers and trends of Chinese and Indian firms. International Business Review, 31(6), 102013.