AIB 2012 Conference Proceedings - Academy of International ...

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Breaking Out of the Cage How Institutional-based Critical Resources Drive Emerging-Economy Firms to
Expand into Advanced Economies or Prevent them from Doing So
Kiattichai Kalasin, Mahidol University
Pierre Dussauge, HEC Paris
This study investigates the impact of critical resources on the international expansion of emerging market firms
into advanced economies. We argue that institution-based critical resources prevent emerging-market firms (EM
firms) from expanding into advanced economies. Institution-based critical resources are resources that firms
develop to respond to a country's institutional environment. Firms frequently develop this type of resource to fill
institutional voids in a country. The differences in the environmental conditions, institutional frameworks, and
rules of the game between emerging markets and advanced economies make it more difficult for EM firms to
transfer their institution-based critical resources to advanced economies, and in turn, encourage firms to
improve their current paths and remain in their domestic markets or expand into other developing countries,
where the institutional environments are similar to those of their home markets. To test our hypothesis, we
examined 847 firms from sixteen emerging markets over a six-year period. We found strong support that
institution-based critical resources of EM firms negatively correlate to the international expansion into advanced
economies. (For more information, please contact: Kiattichai Kalasin, Mahidol University, Thailand:
cmkiattichai@mahidol.ac.th)
Sub-National Institutional Heterogeneity and Outward FDI: From an Emerging Market to Developed Markets
Victor Zitian Chen, University of North Carolina; Columbia University
Jing Li, Simon Fraser University
Daniel M. Shapiro, Simon Fraser University
We investigate how sub-national institutional heterogeneity contributes to the rising investments of emerging
market firms in developed markets. We argue that sub-national institutional heterogeneity in the home country
may lead firms from different regions of the same country to adopt different international strategies.
Theoretically, we propose a twofold positive effect of the development of market-supporting institutions a local
firm's outward FDI into developed markets: one is direct; the other is through the mediation of firm-specific
advantages. Our findings using a survey of 553 Chinese firms from 68 cities support the theory outlined.
Contributions, implications and possible extensions are discussed. (For more information, please contact: Victor
Zitian Chen, University of North Carolina; Columbia University, USA: emgp.editor@gmail.com)
The Role of Home Country Political Resources for Brazilian Multinational Companies
Karina Regina Vieira Bazuchi, Fundação Getúlio Vargas/FGV-EAESP
Suelen Zacharias, Fundação Getúlio Vargas/FGV-EAESP
Rodrigo Bandeira-de-Mello, Fundação Getúlio Vargas
Laurent Broering, Fundação Getúlio Vargas/FGV-EAESP
Maria Fernanda Arreola, Fundação Getúlio Vargas/FGV-EAESP
This paper aims to analyze the interaction between home country governments and Developing Country
Multinational Companies (DCMCs). Draw on evidences from Brazilian political environment and Brazilian
multinationals we investigate the mechanisms governments use to influence the internationalization process
of domestic companies and firm's political strategic responses to shape the home country political institutional
environment in which they operate. FDI outflows from developing countries need to be understood considering
contextual factors such as high levels of government involvement (Wright, Filatotchev, Hoskisson & Peng,
2005). Our main findings support this idea and indicate that home country government uses a series of formal
and informal mechanisms in order to drive the international expansion of DCMCs in both entry and consolidation
phase. Moreover, DCMCs political behavior in home country political environment is an important strategy to
develop political resources and obtain above average returns from governmental benefits. (For more
AIB 2012 Conference Proceedings
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