3 - Theoretical aspects of MNEs from emerging economies  pp. 42-63

Theoretical aspects of MNEs from emerging economies

By Alan M. Rugman

Image View Previous Chapter Next Chapter



What is the current theoretical research agenda regarding the theory of latecomer or emerging economy MNEs? Currently the world's 500 largest MNEs dominate world trade and investment. In terms of FDI the world's largest firms account for 90 percent of the world total. In terms of trade they account for approximately half of world trade, as they often have a hundred or more foreign subsidiaries around the world. These data are well known to scholars in international business (see Rugman 2000 and 2005). It is through the activities of this set of very large MNEs that less developed countries are being integrated into the world's economic system.

The basic logic for this position is explained below in the next section where more details are provided about the nature and scope of the world's 500 largest MNEs. This is followed by data showing that these firms perform mainly on an intra-regional basis (rather than globally) and by data examining the specific activities of the relatively small set of large MNEs from emerging economies. These data are then integrated with the orthodox theory of MNEs to examine how MNEs from emerging economies can succeed in the world economy and act as flagship firms leading economic development.

Recent research in international business shows that FDI and the activities of MNEs are two-way streets.

Bartlett, C. A., and Ghoshal, S. 1989. Managing Across Borders: The Transnational Solution. Boston, MA: Harvard Business School Press.
Brouthers, L. E., O'Donnell, E., and Hadjimarcou, J. 2005. “Generic Product Strategies for Emerging Market Exports into Triad Nation Markets: A Mimetic Isomorphism Approach,” Journal of Management Studies 42(1): 225–245.
Debrah, Y. A., McGovern, I., and Budhwar, P. 2000. “Complementarity or Competition; The Development of Human Resources in a South-East Asian Growth Triangle: Indonesia, Malaysia and Singapore,” International Journal of Human Resource Management 11(2): 314–335.
Fortune Global 500. 2004. http://money.cnn.com/magazines/fortune/global500/
Hobday, M. 1995. “East Asian Latecomer Firms: Learning the Technology of Electronics,” World Development 23(7): 1171–1193.
Nelson, R. R., and Pack, H. 1999. “The Asian Miracle and Modern Growth Theory,” The Economic Journal 109: 416–436.
Nolan, P. 2004. China at the Crossroads, Cambridge, UK: Polity Press.
Porter, M. E. 1990. The Competitive Advantage of Nations, New York: Free Press, MacMillan.
Rugman, A. M. 1981. Inside the Multinationals: The Economics of Internal Markets, New York: Columbia University Press. Reissued in 2006 as Inside the Multinationals, 25th Anniversary Edition, New York: Palgrave Macmillan.
Rugman, A. M. 1987. Outward Bound: Canadian Direct Investment in the United States, Toronto: C. D. Howe and Prentice-Hall of Canada.
Rugman, A. M. 1996. The Theory of Multinational Enterprises, Cheltenham, UK: Edward Elgar.
Rugman, A. M. 2000. The End of Globalization, London: Random House.
Rugman, A. M. 2005. The Regional Multinationals: MNEs and global Strategic Management, Cambridge, UK: Cambridge University Press.
Rugman, A. M., and D'Cruz, J. 2000. Multinationals as Flagship Firms: Regional Business Networks, New York: Oxford University Press.
Rugman, A. M., and Doh, J. 2008. Multinationals and Development, New Haven, CT: Yale University Press.
Rugman, A. M., and McIlveen, J. 1985. Megafirms: Strategies for Canada's Multinationals, Toronto: Methuen.
Rugman, A. M., and Oh, C. H. 2007. “Multinationality and Regional Performance, 2001–2005,” in A. M. Rugman (ed.), Regional Aspects of Multinationality and Performance, Research in Global Strategic Management series, Vol. 13, Oxford, UK: Elsevier, pp. 31–43.
Rugman, A. M., and Verbeke, A. 2003. “Extending the Theory of the Multinational Enterprise: Internalization and Strategic Management Perspectives,” Journal of International Business Studies 34: 125–137.
Thun, E. 2005. Changing Lanes in China: Foreign Direct Investment, Cambridge, UK: Cambridge University Press.
World Bank 1993. The East Asian Miracle: Economic Growth and Public Policy, New York: Oxford University Press.
Zeng, M., and Williamson, P. J. 2007. Dragons at Your Door: How Chinese Cost Innovation is Disrupting Global Competition, Boston, MA: Harvard Business School Press.