Business Practices, Growth and Economic Policy in Emerging Markets

The following sections are included:

• Preface
• About the Editors
• About the Contributors
• List of Chapter Reviewers
• Contents

This book contains eight chapters from eight countries — Australia, China, Croatia, Japan, Mexico, Tunisia, UK and USA. In the lead chapter, Hewett, Krasnikov and Hepworth examine the impact of home market institutional conditions on market entry strategies of firms from emerging markets. The authors explore the extent to which the regulatory institutional environment, corruption and a particular market’s legal system strength influence the overall market expansion patterns of firms from a focal market to other foreign markets. Using the imprinting theory which suggests that firms’ home market institutions become imprinted on their strategies and behaviors, and using data on international trademark registrations and institutional conditions for several emerging markets over a period of 14 years (1999–2012), the authors find corruption to be negatively associated with both the overall intensity and scope of market expansion of firms from a particular market. In addition, they discover that while the level of strength of the emerging market’s legal system is negatively associated with the scope of international expansion, it is positively associated with the intensity of market expansion…

This chapter explores how and to what extent two aspects of the regulatory institutional environment, corruption and a particular market’s legal system strength, influence the overall market expansion patterns of firms from a focal market to other foreign markets. These relationships are viewed using an imprinting theory lens, which suggests that firms’ home market institutions become imprinted on their strategies and behaviors. Using data on international trademark registrations and institutional conditions for several emerging markets (EMs) over a period of 14 years (1999–2012), corruption is found to be negatively associated with both the overall intensity and scope of market expansion of firms from a particular market. In addition, while the level of strength of the EM’s legal system is negatively associated with the scope of international expansion, it is positively associated with the intensity of market expansion.

This chapter investigates why Yakult’s specific marketing method, the “Yakult Lady method”, has been effective to enter emerging markets. Yakult, a Japanese beverage maker, developed a unique marketing method using local women in Japan in the 20th century. Now, it has become Yakult’s key success factor in its overseas businesses, especially in emerging markets. It has also been considered a good way of doing business in emerging countries because it contributes to sustainable economic development. However, scholars know little about why it has succeeded in emerging markets from a business competitiveness perspective. Based on an exploratory case analysis of four of Yakult’s overseas businesses, we find that the Yakult Lady method has performed well in emerging markets because it filled the institutional voids with its own resources — the well-trained Yakult Ladies. By organizing local women, Yakult develops a system that serves as a distribution network, information channel, rich pool of skilled labor and mechanism for money collection. Such findings present a different approach from previous studies for winning in emerging markets.

For emerging economies, artificial intelligence (AI) and cyber security play a vital role as a catalyst to accelerate growth while providing mechanisms to protect and support critical infrastructure. In this chapter, we examine a critical question of what the implications are of the use and growth of AI and cyber security in the context of emerging economies. The chapter finds that that the application of AI tools and techniques to specific cyber security issues, such as intelligent malware and the rapid evolution of cyber-attacks, offers solutions to complex challenges faced by emerging economies. It could potentially underpin solutions for the protection of critical sectors such as education and health (cyber security) when offering a new pathway to innovation and entrepreneurship (AI), enabling co-operation and communication in the new knowledge economy. We make the first attempt to conceptualize the AI–cyber security relationship in the context of economic growth. We distil and connect the specific elements of AI and cyber security that offer an advantage to emerging countries through improved output and increased income through a conceptual framework and explain the impact it would have on specific economic factors and economic performance.

Consumer surveys (CSs) conducted in accordance with The Joint Harmonized European Union Program of Business and Consumer Surveys produce very useful data for economic modeling and forecasting, especially within the area of macroeconomic and financial applications. One part of the application is the investigation of poverty levels and social problems. Therefore, the purpose of this chapter is to examine if the monthly data available from CS can be used to forecast future poverty rates of a country. This research utilizes the mixed sampling (MIDAS) regression approach of modeling and forecasting the yearly poverty rates of a country by using monthly data on the financial situation from the CS data. Results of the analysis show that the potential of using such an approach exists. This means that policymakers of emerging markets could use the MIDAS regression to forecast future poverty rates so that timely decisions and moves can be made, which will reduce costs and achieve the country’s goals of better and faster development.

Building innovation capacity in China is critical to continuing economic development. This study adopts regional innovation system (RIS) and regional innovation capacity (RIC) approaches to investigate the relatively new phenomenon of RIC and identify key factors that explain variations in innovation capacity across regions of China. Our study empirically shows that the key drivers of RIC differ substantively between radical innovation and incremental innovation. Specifically, our findings suggest that innovation capacity is largely related to innovation inputs and these inputs tend to affect incremental innovation more than radical innovation in the context of China. The second finding is a relatively new phenomenon, which we explain using the continuum of CME-LME. Our study contributes to the literature on RIC in a transitional economic context and provides a number of implications for future studies on RIC. The findings also provide significant implications for government policymakers.

An important component of globalization over the past two decades has been emerging economies’ rapid integration into the world economy. Consequently, multinational enterprises (MNEs) have faced substantial talent management challenges to attract and retain high-performing employees. We address here the question of how MNEs have tackled these challenges by focusing on Latin America as an example of a region undergoing rapid economic development during the mining industry boom. Based on a case study of one MNE, interview data were collected in Peru, Chile and Argentina at a time of substantial skill shortages in the region. By analyzing the organizational structure of the MNE and its translation of talent management strategies from corporate to subsidiary levels, we explain who the key actors are in the process of translation and identify five key talent management challenges that foreign-owned MNEs face when operating in Latin America.

Management control systems (MCSs) and business incubators (BIs) are both argued to support start-ups in their survival and growth. This research links these two increasingly relevant topics in literature and aims at answering the research question: How does an incubation process affect MCSs in start-ups? A qualitative and exploratory case study is used to answer the research question. Semi-structured interviews were conducted with three start-ups and the management of the Mexican incubator “TecLean”. The findings of this research suggest that an incubation process influences the development of MCSs in start-ups in at least two ways. First, an incubation process pushes the start-ups toward a non-traditional conceptualization of MCSs to include their stakeholders’ perspective. Second, an incubation process highlights the relevance of MCSs when aiming at obtaining venture capital (VC) and thus increases the start-ups’ awareness and initiative to implement stricter MCSs. This research suggests that practitioners in BIs should teach start-ups consciously on how to design MCSs. This may increase start-ups’ access to VC.

This chapter seeks to identify the information and communication technologies (ICTs) that may amplify the user’s communication process within the context of an emerging market. To better understand the importance of ICTs and the users’ psychological states against these devices, we base our theoretical framework on the theory of social response. A qualitative analysis was conducted to better understand the role of ICTs in the creation of social networks. Our results allow for the identification of virtual anthropomorphic agents and commercial discussion forums with specific characteristics as main technologies that can enhance the presence experience on a commercial site. They can also offer virtual atmosphere, allowing the creation of social links. These technologies may influence the user’s psychological states (i.e. state of flow and telepresence experience) as well as his approach behavior. It is therefore essential for designers of commercial websites to put forward sophisticated ICTs. Thanks to these tools, it is now possible to offer content that is valued on the sensory level for Internet users. Consequently, commercial websites should move from a utilitarian dimension to a hedonistic one.

This chapter concludes the book by summarizing all the chapters. In the lead chapter, findings of Hewett, Krasnikov and Hepworth support the notion that less developed institutional environments in emerging markets can negatively impact the overall intensity of international expansion by firms in those markets. In particular, high levels of corruption and less developed legal and judicial systems can reduce firms’ abilities and/or willingness to embark on an intensive strategy for global expansion. However, their findings demonstrate mixed results in terms of how less developed institutional environments impact emerging markets firms’ scope of expansion. The authors find that firms from more corrupt home markets submit applications to register their trademarks in fewer countries than firms from less corrupt home markets. However, stronger and more impartial legal systems also appear to impede the overall scope of firms’ geographic expansion. The authors also find that when markets are high in corruption and the strength and impartiality of the legal systems are low, the overall level of trademark applications from those countries is lower…

The following section is included:

• Index