Reinventing strategies for emerging markets: beyond the transnational model

Abstract

With established markets becoming saturated, multinational corporations (MNCs) have turned increasingly to emerging markets (EMs) in the developing world. Such EM strategies have been targeted almost exclusively at the wealthy elite at the top of the economic pyramid. Recently, however, a number of MNCs have launched new initiatives that explore the untapped market potential at the base of the economic pyramid, the largest and fastest-growing segment of the world's population. Reaching the four billion people in these markets poses both tremendous opportunities and unique challenges to MNCs, as conventional wisdom about MNC global capabilities and subsidiary strategy in EMs may not be appropriate. How MNCs can successfully enter these low-income markets has not been effectively addressed in the literatures on global and EM strategies. An exploratory analysis, involving interviews with MNC managers, original case studies, and archival material, indicates that the transnational model of national responsiveness, global efficiency and worldwide learning may not be sufficient. Results suggest that the success of initiatives targeting low-income markets is enhanced by recognizing that Western-style patterns of economic development may not occur in these business environments. Business strategies that rely on leveraging the strengths of the existing market environment outperform those that focus on overcoming weaknesses. These strategies include developing relationships with non-traditional partners, co-inventing custom solutions, and building local capacity. Together, these successful strategies suggest the importance of MNCs developing a global capability in social embeddedness. Journal of International Business Studies (2004) 35, 350–370. doi:10.1057/palgrave.jibs.8400099

Critical perspectives on “manufactured” risks arising from Eurocentric business practices in Africa

“…This paper extends the current debate on reinventing entry strategies into emerging markets (London and Hart, 2004;Cuervo-Cazurra, 2012) by arguing that the understanding of the native categories within the African context by MNCs could enhance new ways of conceptualising risk. In this sense, the starting point of any theoretical analysis on the risks arising out of conducting business in Africa must acknowledge the specificities of the African context in terms of local ideas, knowledge, history, language and methods of business practice which are different from those in the West.…”

Tackling informal employment in developing and transition economies: a critical evaluation of the neo-liberal approach

“…This is because it has been increasingly recognised that the majority of informal employment is conducted on a self-employed basis and is undertaken out of choice rather than necessity (Cross, 2000;Cross and Morales, 2007;ILO, 2002;Neuwirth, 2011;Small Business Council, 2004;Snyder, 2004;Venkatesh, 2006;Williams, 2006;Williams and Martinez-Perez, 2014;Williams et al, 2012). The outcome of this recognition is the emergence of a neo-liberal explanation that reads informal employment to be a result of over-regulation rather than under-regulation (Becker, 2004;De Soto, 1989, 2001London and Hart, 2004;Nwabuzor, 2005;Small Business Council, 2004).…”

“…For neo-liberal commentators, informal employment is a result of high tax rates, a corrupt state system and too much interference in the free market, meaning that workers make a rational economic decision to voluntarily exit the formal economy to avoid the time, costs and effort of working on a formal basis (e.g., Becker, 2004;De Soto, 1989, 2001London and Hart, 2004;Nwabuzor, 2005;Sauvy, 1984;Small Business Council, 2004). Informal workers are therefore depicted as heroes directly challenging regulations imposed by intrusive governments and as voluntarily operating in the informal economy in order to cast off the constraints of state over-regulation (e.g., Sauvy, 1984;De Soto, 1989) As Nwabuzor (2005, p.126) puts it, 'informality is a response to burdensome controls and an attempt to circumvent them', or as Becker (2004, p.10) asserts, 'informal work arrangements are a rational response by micro-entrepreneurs to over-regulation by government bureaucracies'.…”

“…The outcome has been the emergence of new theories to explain the prevalence of employment that lacks basic social or legal protections or employment benefits (ILO, 2012(ILO, , 2013. The aim of this paper is to evaluate critically the validity of a theory that has begun to gain widespread support, namely the neo-liberal perspective which views informal employment direct result from high taxes, public sector corruption and too much state interference and consequently calls for reductions in taxation and corruption along with de-regulation so as to minimise state interference in the market (Becker, 2004;De Soto, 1989, 2001London and Hart, 2004;Nwabuzor, 2005). To evaluate critically the validity of this neo-liberal policy approach, the intention in this paper is to analyse whether the cross-national variations in the extent of informal employment across 41 developing and transition countries are correlated with the varying level of tax rates, corruption and state intervention across these countries.…”

Explaining the Prevalence of the Informal Economy in the Baltics: an Institutional Asymmetry Perspective

“…Secondly, 'neo-liberal' theory claims that the informal economy results from high taxes and state interference and thus that reducing taxes and the level of state interference in work and welfare is the way forward (De Soto, 1989;London and Hart, 2004;Nwabuzor, 2005;Schneider and Williams, 2013). Viewed through this lens, the degree of institutional asymmetry will be greater in those nations with higher taxes and levels of state interference in work and welfare systems.…”