The impact of differences in internationalization processes on innovation by emerging economy firms

Abstract

PurposeThe purpose of this paper is to study the differences in the internationalization process of firms from emerging economies and the impact of their international expansion related choices on the nature of technological innovations developed by these firms. Specifically, the authors compare two principal perspectives on internationalization – the incremental internationalization process (slow, gradually increasing commitments using greenfield investments to similar host countries) and the springboard perspective (aggressive, rapidly increasing commitments using mergers and acquisitions to advanced host countries).Design/methodology/approachBuilding on key differences between the incremental internationalization and springboard perspectives, the authors argue that differences in the speed and mode of entry, as well as the interaction between the mode of entry and location of internationalization, will lead to differences in the types of technologies (mature versus novel) developed by emerging economy firms. The authors examine the hypotheses using panel data from 1997 to 2013 on emerging economy multinationals (EMNEs) from the Indian bio-pharmaceutical industry.FindingsThe findings suggest that firms internationalizing at higher speeds and using cross-border M&As tend to have innovations in mature technologies. The interesting findings can be explained by the challenges faced by emerging economy firms in experiential learning and the assimilation of external knowledge. In addition, the authors find that internationalization to technologically advanced countries weakens the relationship between cross-border M&As and innovation in mature technologies, suggesting that direct learning from technologically advanced environments may help alleviate the assimilation challenges of cross-border M&As.Originality/valueThe authors advance literature on EMNE internationalization by comparing the impact of their choice of internationalization approaches (incremental internationalization or springboard approach) on their innovation performance. The authors contribute to literature on EMNEs that has focused on the determinants of internationalization by identifying the learning implications of internationalization. The authors contribute to the nascent stream of literature on the level of innovation and catching up by EMNEs by performing a fine-grained analysis of the nature of technology innovation.

Exploring Internationalization Strategies: A Developing Country Case Study Analysis

“…Consequently, venturing into technologically advanced countries diminishes the association between cross-border mergers and acquisitions (M&As) and innovation in established technologies. This suggests that obtaining knowledge directly from technologically advanced environments might alleviate the integration obstacles linked to cross-border M&As (Samant et al, 2023).…”

The survival of outward investments from China and India: Is there a North-South divide?

“…In contrast, the incremental view, proposed by Johanson & Vahlne (1977), would predict that EMNCs gradually increase their investment in the foreign market as they strengthen their FSAs and acquire experience in the process of internationalization (Meyer & Thaijongark, 2013). Initially entering in countries with similar institutional environments and usage of the low (or moderate) level of investment make this approach distinct from the springboard perspective which advocates targeting advanced countries and higher resource commitment (Samant et al 2021). Munjal et al (2022) examine the evaluation of Indian MNCs' competitive advantage in the previous 20 years and argue that a cross-border acquisitions-led asset augmentation strategy led Indian multinationals to face trade-off in building their technological and marketing capabilities.…”

Os Efeitos Do Direito De Propriedade Intelectual Sobre a Inovação Nos Países Da América Latina: Uma Revisão Sistemática

“…v. 14, n. 3, p. 01-23, 2023. 3 países. No entanto, muito poucos estudos têm abordado a respeito dos efeitos do TRIPS sobre a inovação nos países emergentes (MORRIS et al, 2023;PISCITELLO;THAKUR-WERNZ, 2023;SAMANT et al, 2021;SAHASRANAMAM et al, 2019). Ainda que se observe um esforço na direção de avaliar estas questões relativas à adoção dos padrões mínimos de DPI exigido no acordo TRIPS, os resultados empíricos ainda são bastante restritos e os desafios são maiores quando se trata de países da América Latina.…”