Advertisement

MNE–SME cooperation: An integrative framework

  • Shameen PrashanthamEmail author
  • Julian Birkinshaw
POINT
  • 34 Downloads

Abstract

Although international business scholars have begun to recognize the division of entrepreneurial labor between MNEs and SMEs, there is a fragmented understanding of the different forms MNE–SME cooperation can take. We develop a typology that takes into account not only complementarity of capabilities but also, crucially, the compatibility of intent between MNEs (exploration vs. exploitation) and SMEs (international vs. domestic orientation). The framework offers a novel way to understand the forms and dynamics of MNE–SME cooperation. We also show how it can be applied more broadly, by considering its application to societal challenges, such as achieving the United Nations’ Sustainable Development Goals.

Keywords

MNE-SME cooperation interorganizational relationships SME internationalization global innovation global value chain Sustainable Development Goals 

Résumé

Bien que les spécialistes de l’international business aient commencé à reconnaître la division du travail entrepreneurial entre les EMN et les PME, il existe une compréhension fragmentée des différentes formes que peut prendre la coopération entre EMN et PME. Nous développons une typologie qui prend en compte non seulement la complémentarité des capacités, mais aussi et surtout la compatibilité des intentions entre les EMN (exploration versus exploitation) et les PME (orientation internationale ou nationale). Le cadre offre une nouvelle façon de comprendre les formes et la dynamique de la coopération entre EMN et PME. Nous montrons également comment il peut être appliqué de manière plus large, en considérant son application aux défis sociétaux tels que la réalisation des objectifs de développement durable (ODD) des Nations Unies.

Resumen

Aunque los académicos de negocios internacionales han comenzado a reconocer la división del trabajo empresarial entre las EMN y las pymes, hay un entendimiento fragmentado de las diferentes formas que puede haber en la cooperación entre EMN y pymes. Desarrollamos una tipología que toma en cuenta no sólo la complementariedad de las capacidades sino también, de manera crucial, la compatibilidad de intenciones entre las EMN (la exploración contra la explotación) y las pymes (la orientación internacional frente a la nacional). El marco ofrece una forma novedosa para entender las formas y las dinámicas de la cooperación entre las EMN y las pymes. También mostramos como este puede ser aplicado más ampliamente, al considerar su aplicación a retos sociales, como conseguir los Objetivos de Desarrollo Sostenible (ODS) de la ONU.

Resumo

Embora acadêmicos em negócios internacionais tenham começado a reconhecer a divisão do trabalho empreendedor entre as MNEs e as SMEs, existe um entendimento fragmentado das diferentes formas que a cooperação entre MNEs e SMEs pode assumir. Desenvolvemos uma tipologia que leva em consideração não somente complementaridade de capacidades, mas também, crucialmente, a compatibilidade de intenções entre MNEs (exploração versus exploração) e SMEs (orientação internacional versus doméstica). O modelo oferece uma nova maneira de compreender as formas e dinâmicas da cooperação entre MNE e SME. Também mostramos como ele pode ser aplicado de forma mais ampla, ao considerar sua aplicação a desafios sociais, como alcançar os Objetivos de Desenvolvimento Sustentável (SDGs) das Nações Unidas.

摘要

虽然国际商务学者已开始察觉到跨国企业与中小企业之间的创业劳动分工, 但对跨国企业与中小企业的合作可采取的不同形式的理解是零碎的。我们开发的一种分类不仅考虑能力的互补性, 还考虑跨国公司(探索与开发)和中小企业(国际与国内导向)之间的意图兼容性。该框架提供了一种新颖的方式来了解跨国企业与中小企业合作的形式和动态性。我们还通过考虑它在社会挑战中的应用, 例如实现联合国可持续发展目标(SDGs), 展示它如何能被广泛应用。

Notes

Acknowledgements

We greatly appreciate Alain Verbeke’s editorial guidance and encouragement throughout the process of writing this paper, and acknowledge the valuable reviewer feedback we received. A special word of thanks to Stephen Young for his help over the years with the development of these ideas on MNE–SME cooperation.

References

  1. Acs, Z., Morck, R., Shaver, J.M., & Yeung, B. 1997. The internationalization of small and medium-sized enterprises: A policy perspective. Small Business Economics, 9(1): 7–20.Google Scholar
  2. Adner, R. 2017. Ecosystem as structure: An actionable construct for strategy. Journal of Management, 43(1): 39–58.Google Scholar
  3. Alvarez, S. A., & Barney, J. B. 2001. How entrepreneurial firms can benefit from alliances with large partners. The Academy of Management Executive, 15(1): 139–148.Google Scholar
  4. Baldwin, R. 2016. The great convergence: Information technology and the new globalization. Cambridge, MA: Belknap Press.Google Scholar
  5. Barrientos, S., Gereffi, G., & Rossi, A. 2011. Economic and social upgrading in global production networks: A new paradigm for a changing world. International Labour Review, 150(3–4): 319–340.Google Scholar
  6. Bartlett, C. A., & Ghosh, S. 1989. Managing across borders: The transnational solution. Boston: Harvard Business School Press.Google Scholar
  7. Brouthers, K. D., & Nakos, G. 2004. SME entry mode choice and performance: A transaction cost perspective. Entrepreneurship Theory and Practice, 28(3): 229–247.Google Scholar
  8. Buckley, P. J. 2009. The impact of the global factory on economic development. Journal of World Business, 44(2): 131–143.Google Scholar
  9. Buckley, P. J., Doh, J. P., & Benischke, M. H. 2017. Towards a renaissance in international business research? Big questions, grand challenges, and the future of IB scholarship. Journal of International Business Studies, 48(9): 1045–1064.Google Scholar
  10. Buckley, P. J., & Ghauri, P. N. 2004. Globalisation, economic geography and the strategy of multinational enterprises. Journal of International Business Studies, 35(2): 81–98.Google Scholar
  11. Buckley, P. J., & Prashantham, S. 2016. Global interfirm networks: The division of entrepreneurial labor between MNEs and SMEs. The Academy of Management Perspectives, 30(1): 40–58.Google Scholar
  12. Buckley, P. J., & Verbeke, A. 2016. Smiling and crying curves in international business. International Business Review, 25: 749–752.Google Scholar
  13. Cantwell, J. 2013. Blurred boundaries between firms, and new boundaries within (large multinational) firms: The impact of decentralized networks for innovation. Seoul Journal of Economics, 26(1): 1–32.Google Scholar
  14. Casson, M. 1982. The entrepreneur: An economic theory. Totowa, NJ: Barnes & Noble.Google Scholar
  15. Contractor, F. J. 1990. Contractual and cooperative forms of international business: Towards a unified theory of modal choice. MIR Management International Review, 30(1): 31–54.Google Scholar
  16. Dhanaraj, C., & Parkhe, A. 2006. Orchestrating innovation networks. Academy of Management Review, 31(3): 659–669.Google Scholar
  17. Doh, J. P. 2005. Offshore outsourcing: Implications for international business and strategic management theory and practice. Journal of Management Studies, 42(3): 695–704.Google Scholar
  18. Doz, Y. L. 1988. Technology partnerships between larger and smaller firms: Some critical issues. International Studies of Management & Organization, 17(4): 31–57.Google Scholar
  19. Doz, Y. L., Santos, J., & Williamson, P. 2001. From global to metanational: How companies win in the knowledge economy. Boston: Harvard Business School Press.Google Scholar
  20. Etemad, H. 2005. SMEs’ internationalization strategies based on a typical subsidiary’s evolutionary life cycle in three distinct stages. Management International Review, 45(3): 145–186.Google Scholar
  21. Fernandez-Stark, K., Bamber, P., & Gereffi, G. 2012. Inclusion of small- and medium-sized producers in value chains. Durham, NC: Duke University Center on Globalization, Governance & Competitiveness.Google Scholar
  22. Forsgren, M., Holm, U., & Johanson, J. 2005. Managing the embedded multinational: A business network view. Northampton, MA: Edward Elgar.Google Scholar
  23. Forsgren, M., & Johanson, J. 1992. Managing internationalization in business networks. London: Gordon & Breach.Google Scholar
  24. Fu, X., Essegbey, G., & Frempong, G. 2017. MNEs and capabilities building in Ghana. In P. N. Ghauri, X. Fu, & J. Väätänen (Eds.) Multinational enterprises and sustainable development: 173–193. Bingley, UK: Emerald.Google Scholar
  25. Gereffi, G., & Fernandez-Stark, K. 2016. Global value chain analysis: A primer. Durham, NC: Duke University Center on Globalization, Governance & Competitiveness.Google Scholar
  26. Ghauri, P. N., Fu, X., & Väätänen, J. 2017. Multinational enterprises, sustainable development. London: Oxford University Press.Google Scholar
  27. Ghoshal, S., & Bartlett, C. A. 1990. The multinational corporation as an interorganizational network. Academy of Management Review, 15(4): 603–625.Google Scholar
  28. Grant, R. M., & Baden-Fuller, C. 2004. A knowledge accessing theory of strategic alliances. Journal of Management Studies, 41(1): 61–84.Google Scholar
  29. Hirschman, A. O. 1970. Exit, voice and loyalty responses to decline in firms, organizations and states. Cambridge, MA: Harvard University Press.Google Scholar
  30. Jarillo, J. C. 1988. On strategic networks. Strategic Management Journal, 9(1): 31–41.Google Scholar
  31. Kano, L. 2018. Global value chain governance: A relational perspective. Journal of International Business Studies, 49(6): 684–705.Google Scholar
  32. Kano, L., & Verbeke, A. 2018. Theories of the multinational firm: A microfoundational perspective. Global Strategy Journal.  https://doi.org/10.1002/gsj.1332.Google Scholar
  33. Katila, R., Rosenberger, J. D., & Eisenhardt, K. M. 2008. Swimming with sharks: Technology ventures, defense mechanisms and corporate relationships. Administrative Science Quarterly, 53(2): 295–332.Google Scholar
  34. Knight, G. A., & Kim, D. 2009. International business competence and the contemporary firm. Journal of International Business Studies, 40(2): 255–273.Google Scholar
  35. Kolk, A. 2016. The social responsibility of international business: From ethics and the environment to CSR and sustainable development. Journal of World Business, 51(1): 23–34.Google Scholar
  36. Krishnaswamy, K. N., Mathirajan, M., & Subrahmanya, M. H. B. 2014. Technological innovations and its influence on the growth of auto component SMEs of Bangalore: A case study approach. Technology in Society, 38: 18–31.Google Scholar
  37. Liesch, P. W., & Knight, G. A. 1999. Information internalization and hurdle rates in small and medium enterprise internationalization. Journal of International Business Studies, 30(2): 383–394.Google Scholar
  38. Lu, J. W., & Beamish, P. W. 2001. The internationalization and performance of SMEs. Strategic Management Journal, 22(6–7): 565–586.Google Scholar
  39. Lundan, S. M. 2018. Engaging international business scholars with public policy issues. Journal of International Business Policy, 1: 1–11.Google Scholar
  40. March, J. G. 1991. Exploration and exploitation in organizational learning. Organization Science, 2(1): 71–87.Google Scholar
  41. Markman, G. D., Russo, M., Lumpkin, G., Jennings, P. D., & Mair, J. 2016. Entrepreneurship as a platform for pursuing multiple goals: A special issue on sustainability, ethics, and entrepreneurship. Journal of Management Studies, 53(5): 673–694.Google Scholar
  42. Maksimov, V., Wang, S. L., & Luo, Y. 2017. Reducing poverty in the least developed countries: The role of small and medium enterprises. Journal of World Business, 52: 244–257.Google Scholar
  43. McDermott, G. A., & Pietrobelli, C. 2017. Walking before you can run: The knowledge, networks, and institutions for emerging market SMEs. In T. Pedersen, T. M. Devinney, L. Tihanyi, & A. Camuffo (Eds.) Breaking up the global value chain: 311–332. Bingley: Emerald.Google Scholar
  44. Microsoft. 2018. Microsoft4Afrika: Our story. https://microsoft.com/africa/4afrika/about-us.aspx. Accessed 7 Nov 2018.
  45. Mol, M. J., Stadler, C., & Arino, A. 2017. Africa: The new frontier for global strategy scholars. Global Strategy Journal, 7(1): 3–9.Google Scholar
  46. Monteiro, F., & Birkinshaw, J. 2017. The external knowledge sourcing process in multinational corporations. Strategic Management Journal, 38(2): 342–362.Google Scholar
  47. Morya, K., & Dwivedi, H. 2009. Aligning interests of SMEs and a focal firm (MNE) in a global supply chain setup. Journal of Supply Chain Management, 6(1): 49–59.Google Scholar
  48. Mudambi, R. 2008. Location, control and innovation in knowledge-intensive industries. Journal of Economic Geography, 8(5): 699–725.Google Scholar
  49. Narula, R. 2018. Multinational firms and the extractive sectors in the 21st century: Can they drive development? Journal of World Business, 53(1): 85–91.Google Scholar
  50. Narula, R., & Pineli, A. 2018. Improving the developmental impact of multinational enterprises: Policy and research challenges. Economia e Politica Industriale.  https://doi.org/10.1007/s40812-018-0104-2.Google Scholar
  51. O’Dwyer, M., & O’Flynn, E. 2005. MNC–SME strategic alliances: A model framing knowledge value as the primary predictor of governance modal choice. Journal of International Management, 11(3): 397–416.Google Scholar
  52. Porter, M. E., & Kramer, M. R. 2011. Creating shared value. Harvard Business Review, 89(1/2): 62–77.Google Scholar
  53. Prahalad, C. K. 2004. The fortune at the bottom of the pyramid. New York: Wharton School Publishing.Google Scholar
  54. Prashantham, S., & Birkinshaw, J. 2008. Dancing with gorillas: How small companies can partner effectively with MNCs. California Management Review, 51(1): 6–23.Google Scholar
  55. Prashantham, S., & Dhanaraj, C. 2015. MNE ties and new venture internationalization: Exploratory insights from India. Asia Pacific Journal of Management, 32(4): 901–924.Google Scholar
  56. Prashantham, S., Kumar, K., & Bhattacharyya, S. 2018. International new ventures from emerging economies: Network connectivity and legitimacy building. Management & Organization Review, in press.Google Scholar
  57. Prashantham, S., & McNaughton, R. B. 2006. Facilitation of links between multinational subsidiaries and SMEs: The Scottish Technology and Collaboration (STAC) initiative. International Business Review, 15(5): 447–462.Google Scholar
  58. Prashantham, S., & Yip, G. S. 2017. Engaging with startups in emerging markets. MIT Sloan Management Review, 58(2): 51.Google Scholar
  59. Radjou, N., & Prabhu, J. 2014. Frugal innovation: How to do more with less. London: Profile Books.Google Scholar
  60. Reuber, A. R., Knight, G. A., Liesch, P. W., & Zhou, L. 2018. International entrepreneurship: The pursuit of entrepreneurial opportunities across national borders. Journal of International Business Studies, 49(4): 395–406.Google Scholar
  61. Rugman, A., & D’Cruz, J. 1997. The theory of the flagship firm. European Management Journal, 15(4): 403–412.Google Scholar
  62. Rugman, A. M., & Verbeke, A. 2001. Subsidiary-specific advantages in multinational enterprises. Strategic Management Journal, 22(3): 237–250.Google Scholar
  63. Sachs, J. D. 2018. Acceptance speech: AIB Fellows John Fayerweather Eminent Scholar Award. Academy of International Business Conference, Minneapolis. Video available at https://aib.msu.edu/events/2018/Videos/ShowSessionVideo.asp?videoid=1105. Accessed 7 Nov 2018.
  64. Smedley, T. 2015. Sustainable development goals: What business needs to know. The Guardian, September 24, 2015: Available at https://www.theguardian.com/sustainable-business/2015/sep/24/sustainable-development-goals-business-sdg-targets.
  65. SMS (2018). Cooperative Strategies IG. Available at https://www.strategicmanagement.net/ig-cooperativestrategies/overview. Accessed 7 Nov 2018.
  66. Stevenson, H. H., & Jarillo, J. C. 1990. A paradigm of e ntrepreneurship: Entrepreneurial management. Strategic Management Journal, 11: 17–27.Google Scholar
  67. Strange, R., & Humphrey, J. 2018. What lies between market and hierarchy? Insights from internalization theory and global value chain theory. Journal of International Business Studies.  https://doi.org/10.1057/s41267-018-0186-0.Google Scholar
  68. Teegen, H., Doh, J., & Vachani, S. 2004. The Importance of nongovernmental organizations (NGOs) in global governance and value creation: an international business research agenda. Journal of International Business Studies, 35: 463–483.Google Scholar
  69. Terjesen, S., O’Gorman, C., & Acs, Z. J. 2008. Intermediated mode of internationalization: New software ventures in Ireland and India. Entrepreneurship and Regional Development, 20: 89–109.Google Scholar
  70. Thomas, L. D., Autio, E., & Gann, D. M. 2014. Architectural leverage: Putting platforms in context. Academy of Management Perspectives, 28(2): 198–219.Google Scholar
  71. UNCTAD. 2010. Integrating developing countries’ SMEs into global value chains. New York: United Nations.Google Scholar
  72. UNIDO. 2015. Industrial development report 2016: The role of technology and innovation in inclusive and sustainable industrial development. Vienna: United Nations Industrial Development Organization.Google Scholar
  73. United Nations. 2016. 1st Social Innovation Hub in Egypt focused on women entrepreneurs opens its doors. https://www.un.org/youthenvoy/2016/01/1st-social-innovation-hub-in-egypt-focused-on-women-entrepreneurs-opens-its-doors/. Accessed 7 Nov 2018.
  74. Uzzi, B. 1997. Social structure and competition in interfirm networks: The paradox of embeddedness. Administrative Science Quarterly, 42(1): 35–67.Google Scholar
  75. van Zanten, J. A., & van Tulder, R. 2018. Multinational enterprises and the Sustainable Development Goals: An institutional approach to corporate engagement. Journal of International Business Policy, 1(3-4): 208–233.Google Scholar
  76. Vandaie, R., & Zaheer, A. 2014. Surviving bear hugs: Firm capability, large partner alliances, and growth. Strategic Management Journal, 35(4): 566–577.Google Scholar
  77. Verbeke, A., & Ciravegna, L. 2018. International entrepreneurship research versus international business research: A false dichotomy? Journal of International Business Studies, 49(4): 387–394.Google Scholar
  78. Verbeke, A., & Greidanus, N. S. 2009. The end of the opportunism vs trust debate: Bounded reliability as a new envelope concept in research on MNE governance. Journal of International Business Studies, 40(9): 1471–1495.Google Scholar
  79. Young, S., Hood, N., & Peters, E. 1994. Multinational enterprises and regional economic development. Regional Studies, 28(7): 657–677.Google Scholar
  80. Zahra, S. A., Gedajlovic, E., Neubaum, D. O., & Shulman, J. M. 2009. A typology of social entrepreneurs: Motives, search processes and ethical challenges. Journal of Business Venturing, 24(5): 519–532.Google Scholar
  81. Zahra, S. A., & Nambisan, S. 2012. Entrepreneurship and strategic thinking in business ecosystems. Business Horizons, 55(3): 219–229.Google Scholar

Copyright information

© Academy of International Business 2019

Authors and Affiliations

  1. 1.China Europe International Business SchoolShanghaiChina
  2. 2.London Business SchoolLondonUK

Personalised recommendations