Does Knowledge from Home Markets Boost Outward Foreign Direct Investments of Emerging Economy Multinationals? Evidence from Indian Family EMNEs

Abstract

Despite increasing research on multinationals from emerging economies (EMNEs), our understanding of the antecedents of their international expansion is still limited. In this study, we seek to examine whether knowledge gained from operating in their complex and diverse domestic markets deter or aid the outward foreign direct investments of EMNEs. As family firms are dominant in emerging economies, we further explore how heterogeneity within family firms moderate this relationship. We conduct our investigations using a proprietary longitudinal dataset comprising 213 EMNEs from India featuring in the S&P Bombay Stock Exchange (BSE) 500 index covering a six-year period from 2007-08 to 2012-13, of which 175 were family EMNEs and find supporting evidence for our theoretical predictions.

Overcoming institutional voids in the home country for internationalization: an exploratory examination of institutional strategies of Indian MNEs

“…to examine the internationalization of Indian firms (e.g. Chittoor, Aulakh and Ray, 2015;Mondal and Gadepalli, 2020). We obtain the list of BSE-500 firms along with data on their identity and financial information from Prowess, a database of the Center of Monitoring Indian Economy (CMIE).…”

“…We excluded foreign-owned firms and central and state government enterprises as their OFDI is not comparable to domestic and privately owned firms (Kumar et al, 2020). We also excluded financial services firms as the industry is subject to different accounting principles and OFDI regulations (Mondal and Gadepalli, 2020). After all the eliminations, including the firms for which data on desired financial variables were not available, the final sample consisted of 275 firms.…”