Abstract
Market liberalization in emerging economies has attracted a large number of multinational enterprises that possess advanced technological and managerial capabilities to enter the market. As domestic firms in these markets are mostly technologically and managerially backward, they are pressured to catch up by acquiring strategic resources and capabilities to compete with these multinationals in the home and overseas markets. This study discusses their catch-up strategies in the form of strategic linkages building through inward internationalization, compositional offering, agglomeration, and internationalization of research and development. Such discussion is then illustrated by the selected cases of Indian and Chinese firms. The study concludes with key implications for advanced economy firms as well as emerging economy firms and governments.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
References
Alcacer J, Chung W (2007) Location strategies and knowledge spillovers. Manag Sci 53(5):760–776
Almeida P, Kogut B (1999) Localization of knowledge and the mobility of engineers in regional networks. Manag Sci 45(7):905–917
Awate S, Larsen M, Mudambi R (2012) EMNE catch-up strategies in the wind turbine industry: Is there a trade-off between output and innovation capabilities? Glob Strategy J 2(3):205–223
Awate S, Larsen MM, Mudambi R (2015) Accessing vs sourcing knowledge: a comparative study of R&D internationalization between emerging and advanced economy firms. J Int Bus Stud 46(1):63–86
Chen MJ, Su KH, Tsai WP (2007) Competitive tension: the awareness-motivation-capability perspective. Acad Manag J 50(1):101–118
Cantwell J, Mudambi R (2005) MNE competence-creating subsidiary mandates. Strateg Manag J 26(12):1109–1128
Chen SFS (2010) A general TCE model of international business institutions: market failure and reciprocity. J Int Bus Stud 41(6):935–959
Chesbrough HW (2003) Open innovation: the new imperative for creating and profiting from technology. Harvard Business School Press, Boston
Cohen W, Levinthal D (1990) Absorptive capacity: a new perspective on learning and innovation. Adm Sci Q 35(1):128–152
Cui L, Meyer KE, Hu HW (2014) What drives firms’ intent to seek strategic assets by foreign direct investment? A study of emerging economy firms. J World Bus 49(4):488–501
Cusumano MA, Takeishi A (1991) Supplier relations and management: a survey of Japanese, Japanese-transplant, and US auto plants. Strateg Manag J 12(8):563–588
Dierickx I, Cool K (1989) Asset stock accumulation and sustainability of competitive advantage. Manag Sci 35(12):1504–1511
Dunning JH, Lundan S (2008) Multinational enterprises and the global economy. Elgar, Cheltenham
Feldman MP, Audretsch DB (1999) Innovation in cities: science-based diversity, specialization and localized competition. Eur Econ Rev 43(2):409–429
Glaeser EL, Kerr WR (2009) Local industrial conditions and entrepreneurship: How much of the spatial distribution can we explain? J Econ Manag Strategy 18(3):623–663
Grant RM (1996) Toward a knowledge-based theory of the firm. Strateg Manag J 17(special issue):109–122
Gulati R, Gargiulo M (1999) Where do interorganizational networks come from? Am J Sociol 104(5):1439–1493
Gupta AK, Govindarajan V (2000) Knowledge flows within multinational corporations. Strateg Manag J 21(4):473–496
Hambrick DC, Cho TS, Chen MJ (1996) The influence of top management team heterogeneity on firms’ competitive moves. Adm Sci Q 41(4):659–684
Hamel G (2006) The why, what and how of management innovation. Harv Bus Rev 84(2):72–84
Hanson G (2000) Firms, workers, and the geographic concentration of economic activity. In: Clark GL, Feldman MP, Gertler MS (eds) The Oxford handbook of economic geography. Oxford University Press, New York, pp 477–494
Hennart JF (2009) Down with MNE-centric theories! Market entry and expansion as the bundling of MNE and local assets. J Int Bus Stud 40(9):1432–1454
Humphrey J (2003) Globalization and supply chain networks: the auto industry in Brazil and India. Glob Netw 3(2):121–141
Johansen J, Vahlne JE (2009) The Uppsala internationalization process model revisited: from liability of foreignness to liability of outsidership. J Int Bus Stud 40(9):1411–1431
Jullens J (2013) How emerging giants can take on the world. Harv Bus Rev 91(12):121–125
Kilduff GJ, Elfenbein HA, Staw BM (2010) The psychology of rivalry: a relationally dependent analysis of competition. Acad Manag J 53(5):943–969
Kittilaksanawong W (2015a) How do emerging economy firms learn to evolve from contract manufacturing to own brand management? In: Camillo AA (ed) Global enterprise management: new perspectives on challenges and future developments, vol 2. Palgrave Macmillan, London, pp 1–18
Kittilaksanawong W (2015b) Value creation and appropriation in buyer–supplier relationships: governance, competition and cultures. In: Christiansen B (ed) Global supply chain management. IGI Global, Hershey, pp 127–138
Kittilaksanawong W, Dai WQ (2014) Chinese outward foreign direct investment in Africa: political economy, aid and bargaining power. In: Erdoğdu MM, Christiansen B (eds) Comparative political and economic perspectives on the MENA region. IGI Global, Hershey, pp 246–260
Kittilaksanawong W, Ren ZQ (2013) Innovation capability building through intermediary organizations: cases of manufacturing small- and medium-sized enterprises from China’s Zhejiang province. Asian J Technol Innov 21(S2):62–79
Kittilaksanawong W, Palecki C (2015) Renault–Nissan alliance: will further integration create more synergies? Ivey Publishing, Ontario
Kittilaksanawong W, Chen XD, Duan CQ (2013) What drives the strategic alliance formation of transition-economy small- and medium-sized enterprises? The moderating role of intermediary organizations. In: Chan T, Cui G (eds) Multinationals and global consumers: tension, potential and competition. Palgrave Macmillan, Basingstoke, pp 40–57
Kogut B, Zander U (1992) Knowledge of the firm, combinative capabilities, and the replication of technology. Organ Sci 3(3):383–397
Kumaraswamy A, Mudambi R, Saranga H, Tripathy A (2012) Catch-up strategies in the Indian auto components industry: domestic firms’ responses to market liberalization. J Int Bus Stud 43(4):368–395
Lamin A, Livanis G (2013) Agglomeration, catch-up and the liability of foreignness in emerging economies. J Int Bus Stud 44(6):579–606
Li J, Kozhikode RK (2009) Developing new innovation models: shifts in the innovation landscapes in emerging economies and implications for global R&D management. J Int Manag 15(3):328–339
Li J, Chen D, Shapiro DM (2010) Product innovations in emerging economies: the role of foreign knowledge access channels and internal efforts in Chinese firms. Manag Organ Rev 6(2):243–266
Luo Y, Child J (2015) A composition-based view of firm growth. Manag Organ Rev 11(3):379–411
Luo Y, Tung RL (2007) International expansion of emerging market enterprises: a springboard perspective. J Int Bus Stud 38(4):481–498
Luo Y, Sun J, Wang SL (2011) Emerging economy copycats: capability, environment, and strategy. Acad Manag Perspect 25(2):37–56
Marshall A (1898) Principles of economics. Macmillan, London
Mathews J (2006) Dragon multinationals: new players in 21st century globalization. Asia Pac J Manag 23(1):139–141
McCann BT, Folta TB (2008) Location matters: where we have been and where we might go in agglomeration research. J Manag 34(3):532–565
McDermott GA, Corredoira RA (2010) Network composition, collaborative ties, and upgrading in emerging-market firms: lessons from the Argentine auto-parts sector. J Int Bus Stud 41(2):308–329
McGaughey SL (2002) Strategic interventions in intellectual asset flows. Acad Manag Rev 27(2):248–274
Meyer KE, Sinani E (2009) When and where does foreign direct investment generate positive spillovers? A meta-analysis. J Int Bus Stud 40(7):1075–1094
Mudambi R (2008) Location, control and innovation in knowledge-intensive industries. J Econ Geogr 8(5):699–725
Mudambi R, Navarra P (2004) Is knowledge power? Knowledge flows, subsidiary power and rent-seeking within MNCs. J Int Bus Stud 35(5):385–406
Mudambi R, Swift T (2012) Multinational enterprises and the geographical clustering of innovation. Ind Innov 19(1):1–21
Oxley JE, Sampson RC (2004) The scope and governance of international R&D alliances. Strateg Manag J 25(8–9):723–749
Peng MW (2003) Institutional transitions and strategic choices. Acad Manag Rev 28(2):275–296
Porter ME (1998) Clusters and the new economics of competition. Harvard Bus Rev 76(6):77–90
Rodan S, Galunic C (2004) More than network structure: how knowledge heterogeneity influences managerial performance and innovativeness. Strateg Manag J 25(6):541–562
Saxenian A (1991) The origins and dynamics of production networks in Silicon Valley. Res Policy 20(5):423–437
Staw B, Sandelands LE, Dutton JE (1981) Threat-rigidity effects in organizational behavior: a multilevel analysis. Adm Sci Q 26(4):501–524
Uhlenbruck K, Meyer KE, Hitt MA (2003) Organizational transformation in transition economies: resource-based and organizational learning perspectives. J Manag Stud 40(2):257–282
Van den Bosch FAJ, Volberda HW, De Boer M (1999) Coevolution of firm absorptive capacity and knowledge environment: organizational forms and combinative capabilities. Organ Sci 10(5):551–568
von Zedtwitz M (2004) Foreign R&D laboratories in China. R&D Manag 34(4):439–442
von Zedtwitz M, Gassman O (2002) Market versus technology drive in R&D internationalization: four different patterns of managing research and development. Res Policy 31(4):569–588
Winter S (2003) Understanding dynamic capabilities. Strateg Manag J 24(10):991–995
Zahra SA, George G (2002) Absorptive capacity: a review, reconceptualization and extension. Acad Manag Rev 27(2):185–203
Zeng M, Williamson PJ (2007) Dragons at your door: how Chinese cost innovation is disrupting the rules of global competition. Harvard Business School Press, Boston
Zhang Y, Yang SY (2015) Chery automobile: Chinese firms catching up. Ivey Publishing, Ontario
Acknowledgment
This work was supported by JSPS KAKENHI Grant No. 15K03694.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2017 Springer International Publishing Switzerland
About this chapter
Cite this chapter
Kittilaksanawong, W. (2017). Catch-Up Strategies of Emerging Market Firms: Lessons Learned from India and China. In: Brennan, L., Vecchi, A. (eds) International Manufacturing Strategy in a Time of Great Flux. Measuring Operations Performance. Springer, Cham. https://doi.org/10.1007/978-3-319-25351-0_4
Download citation
DOI: https://doi.org/10.1007/978-3-319-25351-0_4
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-319-25350-3
Online ISBN: 978-3-319-25351-0
eBook Packages: Business and ManagementBusiness and Management (R0)