A Supply Chain Perspective on Strategic Foothold Moves in Emerging Markets

Abstract

Emerging markets present intriguing growth opportunities, but they are often extremely risky for foreign entrants. Given this riskiness, companies entering emerging markets may establish strategic footholds—small positions that they can later choose to expand (referred to as an attack) or abandon (referred to as a withdrawal)—rather than making costly large‐scale entries. While scholars have begun to examine the competitive dynamics surrounding footholds, the influence of the supply chain has not been considered. This is surprising given that supply chains are key to the daunting task of meeting emerging market demands. To build on extant research, we theorize about how environmental uncertainty (e.g., stemming from factors such as poor infrastructure and political unrest), foothold portability (i.e., how easily the foothold resources can be redeployed in the firm's supply chain), and supply chain knowledge influence (or should influence) firms’ decisions about footholds. This represents a needed step forward in understanding the central role of supply chains in foothold maneuvers in emerging markets. In taking this step, we posit that firms must consider both competitive dynamics and their supply chains or they risk over/under estimating the viability and value of their footholds.

Emerging Market Footholds and Knowledge: An Examination of New Product Launch Performance

“…Second, we shed light on how emerging market footholds accentuate performance by proposing that they facilitate the acquisition of strategically valuable market‐specific knowledge, consistent with recent theorizing (Craighead et al. ). Third, although supply chain research has generally found knowledge to be a performance driver (Wowak et al.…”

“…Using an emerging market foothold, a firm can create a presence in an emerging market (Craighead et al. ) while minimizing costs and associated risks. Through the emerging market foothold, the firm gains vital experience from which to build appropriate supply chain capabilities, putting it in a position to effectively expand in the market if conditions warrant.…”

“…More broadly, an emerging market foothold represents a theoretically important conduit through which firms can absorb logistics knowledge (Craighead et al. ), enabling firms to navigate weak institutional environments that could otherwise preclude products’ successful delivery to emerging market customers (Khanna and Palepu ; Kistruck et al. ).…”

“…; Craighead et al. ). In theory, these footholds enable the acquisition of market‐specific knowledge over time (Wowak et al.…”

“…; Craighead et al. ), and such footholds may evolve as a firm exercises its option to launch products and realize subsequent emerging market growth.…”