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This volume fills a gap in the international business literature, offering the perspectives of researchers who are deeply embedded in one key emerging market, India. With the global economy changing dramatically, firms from emerging markets are playing increasingly important roles in both outward and inward internationalisation. International Business Strategy offers profound insights into international business activities in this rapidly-evolving environment, in which multinational corporations from emerging markets are now influential players. Reflecting the complex nature of India itself, the chapters employ a variety of theoretical lenses to shed light on a wide range of issues encountered by Indian businesses, from some of the world’s largest corporations to small, entrepreneurial firms.



1. International Business in the Context of Emerging Markets

We provide an introduction to the volume, offering some contextual background regarding the importance of emerging markets in the global economy, followed by brief summaries of each of the 19 chapters in the book. Together, the chapters, based on institutionally-informed perspectives, offer insights into the complexity of doing business in the context of one of the world’s largest, and most important, emerging markets: India.
S. Raghunath, Elizabeth L. Rose

International Strategy in the Emerging-Market Context: The Big Picture


2. Taking Stock of the Principal–Principal Agency Perspective: A Review and the Way Ahead

Traditional agency theory (principal-agent conflict) has been a widely-accepted theoretical perspective for understanding corporate governance practices in developed economies. Institutions in these economies are characterized by effective contract enforcement, disperse ownership, separation of ownership, and control and protection of minority shareholders’ rights. However, the principal-agent relationship, alone, may not be appropriate for analyzing corporate governance in emerging-economy institutional contexts, in which these institutional characteristics are often absent, weak, or poorly implemented. Scholars characterize corporate governance in emerging economies as having a conflict of interest between controlling and minority shareholders, known as the “principal-principal agency model”. This relatively new sub-field has attracted the attention of scholars across disciplines including finance, economics, and strategy. The present chapter attempts to synthesize and review conceptual and empirical developments regarding principal-principal conflicts, and suggests possible directions for future studies.
Kshitij Awasthi

3. Internationalization of Emerging-Market Firms: The Contingent Role of Board Capability

Despite extensive research on the internationalization–performance relationship, our understanding of the role of board of directors in the internationalization of emerging-market firms remains relatively limited. In addition, research pertaining to the board’s influence on firm performance has tended to focus more on board content than on its processes. In an attempt to address this research gap, we study the contingent role of the board’s capabilities on the relationship between internationalization and performance, in emerging-market firms. We propose that board tenure will have a negative moderating effect, whereas board members’ experience as CEO or general manager, industry-specific experience, international experience, and level of academic achievement will have positive moderating effects. We argue that, in the context of emerging market firms, board interactions are particularly important, and propose that moderate levels of board interaction will be most beneficial for the internationalizationperformance relationship.
Sandeep Sivakumar, Sreevas Sahasranamam, Elizabeth L. Rose

4. Research in Multipoint Competition: What Do We Know and Where Are We Headed?

With increasing diversification of product scope and geographical footprint, firms meet each other in multiple markets, and the resulting market overlap influences their competitive interactions. This phenomenon of multimarket competition is a young, yet growing, branch of research often subsumed within the work on competitive dynamics. This chapter reviews the scholarly published work on multimarket competition in the strategic management literature. My focus is to map the development of this field, to delineate the boundaries between multimarket competition and competitive dynamics in general, to elucidate the factors that characterize multimarket competition, and to suggest future research directions.
Rupanwita Dash

Strategic Changes in Organizational Forms


5. Internalization of IJVs and Institutions

An international joint venture, upon termination, is an attractive option for the parent organizations to convert to a wholly-owned subsidiary. Since each parent organization has the option to internalize the joint venture, there is the potential for competition between the firms when this mode change occurs. We study the impact of the institutional environment on the issue of which parent organization is able to internalize the joint venture. Analyzing international joint ventures that were internalized by one of the parent firms in India, we find that, in industries with higher of level of regulation in the host country, the local parent organization is more likely to internalize the joint venture.
Shailen Kumar Dalbehera, S. Raghunath, R. Srinivasan, Murali Patibandla, V. Nagadevara

6. Do Spin-Offs Really Create Value? Evidence from India

There is a common perspective in the academic and popular literature that spin-offs tend to create value for shareholders (e.g., Cusatis, Miles, & Woolridge, 1993; Desai & Jain, 1999; Sin & Ariff, 2006; Sudarsanam & Qian, 2007; Veld & Veld-Merkoulova, 2009; Khedekar, 2013). This view is based on evidence from a number of studies using data from the USA and indicating that, on average, the announcement of a spin-off is associated with positive abnormal stock returns. Moreover, based on evidence from studies done on US firms (e.g., Cusatis et al., 1993; Desai & Jain, 1999; McConnell, Ozbilgin, & Wahal, 2001) shares of firms completing spin-offs appear to exhibit excess returns over periods of up to three years following the restructure. However, studies using European data have not indicated the presence of significant abnormal stock returns following spin-offs.
Venkatesh Kambla

7. The Influence of Liabilities of Origin on EMNE Cross-Border Acquisition Completion

A recent, and an increasingly salient, trend in the global business landscape has been the rapid rise in outward foreign direct investment (FDI) by multinationals from emerging economies such as India and China. The percentage of total world outward FDI from emerging economies grew from just 5 % in 1990 to a substantive 34 % in 2014 (UNCTAD, 2015). Emerging-market multinational enterprises (EMNEs) have been following trajectories different from those predicted by dominant theoretical perspectives on internationalization. One of these differences is a preference for high-commitment entry modes, such as acquisitions in heterogeneous geographies; this is contrary to the path of incremental internationalization predicted by the Uppsala model (Johanson & Vahlne, 1977). In fact, the cross-border acquisition (CBA) has been recognized as one of the key entry modes for emerging-economy firms, with the value of these acquisitions growing from US$9.5 billion in 1990 to US$152 billion in 2014, accounting for a record-high share of 38 % of the total M&A activity across the globe (UNCTAD, 2015). Scholars have theorized that EMNEs undertake acquisitions in order to obtain strategic assets, such as cutting-edge technology, or global brands, in order to compensate for lack of these conventional firm-specific advantages (Luo & Tung, 2007; Mathews, 2006; Contractor, 2013). Acquisitions may also be used as a means to overcome liabilities of origin, such as underdeveloped institutions in the home country, inadequate managerial capabilities, and the lack of global reputation (Child & Rodrigues, 2005; Bonaglia, Goldstein, & Mathews, 2007; Madhok & Keyhani, 2012). However, a question that has yet to be asked, and the focus of this study, is that, while CBAs may help EMNEs traverse the reputation barrier and gain global capabilities, to what extent do these liabilities of origin influence acquisition completion?
Shobhana Madhavan, Deepak Gupta

8. International Strategic Alliances for Innovation in the Indian Biotechnology Industry

Innovation has increasingly become a key activity for firms seeking to cope with rapid changes in technology, increased competition, and growing product complexity. The literature on alliance-based innovation strategies is premised on the strategic intent of at least one of the partner firms to appropriate knowledge applicable to making new products, processes, or services; the intent is to absorb the partner’s capabilities. To learn through an alliance, a firm must have access to partner knowledge and work closely with the partner. Therefore, both the collaborative process and firm-specific factors must be understood. This chapter is based on research that seeks to determine factors that may optimize learning and hence innovation. The Indian biotechnology industry is chosen as the context for this study, since alliances in this industry are predominantly undertaken for the purposes of innovation and learning. Implications of this research for practice are also discussed.
Thomas Joseph, S. Raghunath

Entrepreneurship and Exporting


9. Emerging-Market Born Globals: The Influence of Product-Related Factors on Internationalization Mode in the Indian Apparel Industry

Motivated by the fact that emerging-market firms are increasingly internationalizing their operations, this study explores the influence of product-related factors on the internationalization modes of emerging market born global firms, in terms of their initial and continued international expansion. Based on data from seven born globals in the Indian apparel industry, we find that these firms continue to be global players using low-commitment internationalization modes in their initial and continued internationalization, and that their product offerings influence their selection of entry modes and their acquisition of foreign customer knowledge. We have identified and bridged a gap in the knowledgebased internationalization process perspective relating to the influence of product-related factors on companies’ acquisition of foreign market knowledge and internationalization processes.
S. Raghunath, Krishna Kumar Balaraman

10. Innovation and Entrepreneurship in the Informal Economy: Insights from the Ground Zero

The chapter attempts to offer a view on how entrepreneurship and innovation exist in an informal economy. Contextualizing the study to India, the chapter adopts a case study approach, to identify the salient innovation types that entrepreneurs exercise while operating on the margins of the formal economy. The work contests the notion that entrepreneurship in informal economies or developing economies is largely necessity-driven. Through case documentation, the prominence of opportunity driven entrepreneurship and the adoption of heuristics are shown, along with how entrepreneurs become adept at discovering new markets and managing government relationships to remain viable.
Pavan Soni

11. Determinants of Export Performance: An Empirical Analysis of the Indian Pharmaceutical and Automobile Industries

Market globalization provides export-led growth opportunities for firms. Exporting is considered to be a means to corporate growth for firms in various Indian industries. Among the Indian industries, knowledge-based industries, such as pharmaceuticals and automobiles, have witnessed export oriented growth in the past two and half decades. This study presents an empirical analysis of the determinants of export performance in the Indian pharmaceutical and automobile industries. Among the various determinants of export performance considered in earlier studies, this study considered export sales as the dependent variable, with sales of the firm, profitability, and R&D investments as independent variables. The results indicate that sales and R&D investments especially important in the Indian pharmaceutical industry, while profitability was found to be important in the Indian automobile industry.
Satyanarayana Rentala, Byram Anand, Majid Shaban

Finance and Technology


12. FDI and Economic Growth Nexus for the Largest FDI Recipients in Asian Emerging Economies: A Panel Co-integration Analysis

Foreign direct investment (FDI) inflows and outflows have substantial impact on the world economy, and are important for both developed and developing countries (e.g., Temiz & Gokmen, 2014). Foreign investments are generally assumed to have positive impacts on a country’s economy, and to be among the principal factors supporting accelerated economic growth (Okamoto & Sjoholm, 2005). In the literature, among the most-cited reasons for Asia’s strong economic growth in the recent era has been the inflow of FDI into the region. This inward FDI has also proven to be an effective means through which Asian countries are integrated with rest of the world (and vice-versa) (Vadlamannati, Tamazian, & Irala, 2009). Today, most countries are inclined to attract FDI, due to the expected favorable effects on income generation from capital inflows, advanced technology, management skills, and market know-how. In developing countries, such as China and India, the attraction of foreign capital is considered to be a necessary means for economic growth (Choong & Lam, 2010; Kurtishi-Kastrati, 2013). It is widely recognized that FDI provides economic benefits to recipient countries by providing capital, foreign exchange, and technology, and by increasing both competition and access to foreign markets (e.g., Romer, 1993; World Bank, 1999; Crespo & Fontoura, 2007).
Preeti Flora, Gaurav Agrawal

13. Global Financial Markets Integration: A Comparative Study Between Developed and Emerging Economies

Co-integration of global financial markets has turned out to be an appealing research issue after global financial crisis of 2007–2008. Co-integration of global financial markets is a frequently researched phenomenon in the finance and economics literature. Most of the existing research work in market co-integration commonly used time series techniques to find out short-run and long-run relation among different financial time series. In 2007–2008, the world had seen drastic changes in the financial status of various economies. These drastic changes have been reflected due to the occurrence of various series of events starting with real estate bubble in the USA in 2007, Lehman brothers’ bankruptcy in 2008, and many other such events consecutively. These series of events resulted in a sharp drop in international trade, rising unemployment, and depreciating commodity prices. Markets across the world, which were going through bull phases, gradually began to fall down. Almost all indices have shown a negative performance during 2007–2008. It is a well-established fact that the performance of all the world stock markets is directly responsible for a significant amount of the world’s economic condition. In general stock market growth is a leading indicator that the state of an economy is flourishing, while declining trends indicate economic slowdown. Since stock markets are primarily based on investors’ confidence, the impact of such events becomes a prime factor which cannot be undermined while determining their performance. While stock markets reveal the economic state of the respective nations, their impact has been growing tremendously across national boundaries with the advent of globalization and liberalization, thereby making the co-integration among markets across the world imperative. Thus, this increased interdependency among markets has led to a global impact of the above events, causing Global Financial Crisis (GFC). Thus, this stock market co-integration plays a major role, especially during these times of crises. The concept of stock market integration focuses on the idea that economies can integrate among themselves through the use of the marketplace. Though this integration has given vast diversification for the investors, it has also introduced the factor of risk, due to which any major event is presumed to have a global impact. It is during a crisis in the financial markets that the importance of integration is highlighted. While there might be different factors which could affect economies worldwide, integration among these economies considerably amplifies the impact that they could possibly create. Thus, we see that integration among economies has its own pros and cons depending on the situation. Considering the pivotal role that stock market integration plays in the world of markets, this chapter attempts to study co-integration among different economies and how the degree of co-integration varies in times of global events. This could provide an insight as to how different markets react to global crisis nowadays and might be helpful in providing scope for further work in what could be done to mitigate the undesirable effects of integration. The integration among economies has been found to vary from time to time and also the extent or degree to which integration exists fluctuates. Hence, it becomes important for us to select the time during which we plan to conduct the study. This chapter analyzes whether the patterns of global market integration have changed because of the financial crisis of 2007–2008. Our data set consists of ten market indices from three major continents around the world considering three phases during the period of 2005–2011.
Gaurav Agrawal

14. Vicious Cross-licensing Strategy for Technology Spread: Case Study of Samsung Electronics

Cross-licensing strategies aim to reduce litigation expenses in patents and to expand market territories by limiting the competition by using the other party’s patent rights. The present study portrays the vicious cross-licensing strategy used by ITES companies as a tool to reduce risk and make profits. The competency of the model was demonstrated with the Herfindahl-Hirschman Index. The case study concludes that multiple cross-licensing business models are indispensable to get rid of tangible losses in transnational risk management.
Baba Gnanakumar

Managing People in Emerging-Market Firms


15. Repatriates’ Organizational Commitment in the Indian Information Technology (IT) Environment

Expatriation is the process of sending employees to another country, for example, managers who are posted overseas to lead a subsidiary of a multinational enterprise (MNE). Companies spend huge amounts of money on their expatriates. For example, Stelmer (2001) estimated that most companies spend between US $300,000 and US $1,000,000, annually, on each individual on foreign assignment. On completion of the international assignment (or multiple such assignments), the expatriates return home, and then the process of repatriation begins. However, companies often underestimate the extent and importance of the repatriation process, on the basis that the employees are just “coming back home” and thus will have no difficulties in adjusting to their own environment (Stroh et al., 1998; Adler, 1981; Tung, 1998). Such underestimation of the repatriation process is viewed as a contribution factor for the high turnover among repatriates. There is strong evidence that employees who have been sent to work abroad are more likely to seek new job opportunities than those who have remained in the home country (Stroh, 1995).
Krishnaveni Muthiah, B. R. Santosh

16. Challenges in Employee Engagement in Emerging Economies

One of the key determinants of success for any organization is the engagement level of its employees. The increasing emphasis on employee engagement in organizations across the globe is justified as it not only contributes to employee retention and productivity, but also directly impacts a company’s reputation and customer satisfaction (Shriram, 2012). Various other researches, such as Kular, Gatenby, Rees, Soane, and Truss (2008); May, Gilson, & Harter (2004); Schaufeli & Bakker (2004); Strümpfer (2003), assert that the topic of employee engagement fascinates the academicians, researchers, and practitioners alike.
Arun Sacher, Ankur Lal

17. The Combined Use of Formal and Informal Ethics Training in the Indian IT Companies

The Indian IT industry, an important contributor to global GDP, is recognized for its low-cost and high quality performance. Additionally, ethical performance is an imperative, to compete in today’s world. This study attempts to investigate the effectiveness of the present state of ethics training in the Indian IT sector. First, we have conceptualized a theoretical framework, the Perception of Ethics Training in Employees and Organisations (PETINEO), to underline the importance of the perception toward ethics with respect to individual ideologies and organizational values. Second, we have studied the statistical relationships among various components of this model. Third, under the rubric of PETINEO, we have examined the effectiveness of ethics training programs for Indian IT companies. Our results suggest that the combination of formal and informal approaches to ethics training has stronger impact on ethical decision-making than the use of any one of them in isolation.
Pratima Verma, Siddharth Mohapatra

18. Leadership Excellence in Organizations in the Mekong Region: A Comparative Study of Thailand, Cambodia, Lao, and Vietnam

This research seeks to develop an understanding of work and leadership values as perceived by local managers. Though the extant literature has charted managerial values of countries such as Thailand (e.g., Selvarajah, Meyer, & Donovan, 2013; Yukongdi, 2010; Cuong & Swierczek, 2008) and Vietnam (e.g., Selvarajah, Meyer, Vinen, & Pham, 2010), a distinct paucity of empirical studies is evident in the other two Mekong countries. Studies such as Selvarajah, Meyer, Davuth, and Donovan (2012) and Chandler (1998) provided an initial explanation for the behavior of Cambodians, based on their adherence to dharmic philosophies and the Theravada Buddhist traditions of authority, individual pursuit of achievement, social interaction, and balance. The Lao People’s Democratic Republic, being a land-locked nation and one of the poorest, has been overlooked. In this chapter, we address some of these concerns and look at the Mekong as a region. Of the four Mekong nations, three are Theravada Buddhist, while Vietnam is Confucian. This chapter does not explore the religious influence on managerial behavior (MB), but addresses the contextual nature of MB in the Mekong organizations.
Christopher Selvarajah, Denny Meyer

Doing Well or Doing Good? Two Views of CSR in India


19. Mandated Corporate Social Responsibility (mCSR): Implications in Context of Legislation

Worldwide, governments are attempting a unique combination of hard and soft legislation aimed at getting business to share responsibility for providing and sustaining a welfare state. The discretionary responsibility of philanthropy is increasingly coming under mandate; we label this as mandated CSR (mCSR). The concept of mCSR is discussed in the present chapter, using experiences from Indian legislation. In 2013, India legislated that large-sized companies must spend two percent of their net profit on priority issues such as poverty alleviation, capacity building, and environmental sustainability. This study discusses various problems and implications that are likely to be inherent in mCSR, using the Indian legislation as a backdrop.
Kajari Mukherjee

20. Connecting the Base of the Pyramid to Global Markets Through E-commerce: A Case Study of BAIF (India)

Exploring the markets in developing nations, as a business opportunity, has become attractive to multinational enterprises (MNEs) in recent years. This chapter connects the “base of the pyramid” (BOP) perspective with a case study of one of India’s oldest nongovernmental organization’s (NGO) attempts to accessing global customers and markets via e-commerce. It contributes to the nascent literature about the experience of grass-root-level organizations in using technology to seek global consumers. The chapter uses the backdrop of the booming Chinese and Indian e-commerce industries to present its point of view through a model that presents the inter-linkages among the MNEs operating in international markets and the developing economies.
Raji Ajwani-Ramchandani


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