ادغام شرکت های بازار نوظهور در بازارهای پیشرفته: استراتژی تطبیق با منابع و نهاد مبتنی بر صنعت

This study draws upon the resource-based view and the institution-based view of the firm to provide a comprehensive overview of how different resource-, institution- and industry-based antecedents affect the motivations guiding the acquisitions that emerging market firms undertake in advanced markets. These antecedents can influence emerging market firms’ capacities to absorb or exploit technological and/or marketing advantages in advanced markets. In order to be successful, emerging market firms have to undertake those upmarket acquisitions that best “fit” their antecedents. Four mutually exclusive acquisition strategies are derived, which are then illustrated using examples of Indian firms’ acquisitions in advanced markets.

A growing number of emerging market (EM) firms are showing extraordinary competitiveness in global markets, thus attracting the interest of both media and academia. Some of them are challenging competitors from advanced markets (AMs) (The Economist, 2010), and are developing significant technological, organizational and strategic innovations (Gaur and Kumar, 2010 and Mathews, 2006). This phenomenon is widespread among EMs1 (Gammeltoft, Barnard, & Madhok, 2010). Given the growing visibility of EM firms’ international expansion, an extensive body of literature has focused on this context. Scholars have studied EM firms’ internationalization drivers (Athreye and Kapur, 2009 and Aulakh, 2007), entry modes (Duysters, Jacob, & Lemmens, 2009), growth rates (Arora et al., 2001 and Fortanier and van Tulder, 2009) and host location choices (Duysters et al., 2009 and Morck et al., 2008). They have also investigated the ownership structures and relational assets of these internationalizing firms (Arora et al., 2001, Bhaumik et al., 2010, Douma et al., 2006, Elango and Pattnaik, 2007, Filatotchev et al., 2009 and Morck et al., 2008), and the performance effects of their internationalization (Aulakh, 2007 and Douma et al., 2006). In the 1970s, only a small number of EM firms had internationalized, often in neighbouring regions through limited foreign operations (Gammeltoft et al., 2010). The impressive recent emergence of EM firms’ foreign investments has therefore fuelled a debate over potential explanations and whether these explanations can be linked to traditional theoretical perspectives based on mature AM firms (Fortanier & van Tulder, 2009). Some authors claim that traditional theoretical explanations are largely suitable for EM firms (see Narula, 2006 and Rugman and Li, 2007), whereas others argue that EM firms should be studied using different perspectives (cf. Madhok and Keyhani, 2012 and Mathews, 2006). Despite this vast body of literature, a unified, comprehensive theoretical framework that explains the internationalization of EM firms is still lacking (Sun, Peng, Ren, & Yan, 2012). Scholars in this stream of research tend to present partial, and sometimes radically opposite, explanations. For instance, EM firms are sometimes said to undertake acquisitions in AMs to gain access to the traditional advantages they otherwise lack (Duysters et al., 2009, Mathews, 2006 and Mathews and Zander, 2007). At other times, such acquisitions are described as a sign of EM firms’ abilities to exploit their advantages abroad, just as AM firms can normally do (e.g., Rugman & Li, 2007). In other words, no consensus has been reached regarding the augmenting or exploiting motivations for EM firms’ acquisitions in AMs. With regard to this theoretical controversy, the current paper aims to answer two interrelated questions about EM firms’ internationalization: Which motivations guide EM firms’ acquisitions in AMs? and Which EM firms should follow augmenting, rather than exploitative, acquisitions in AMs? I answer these questions by identifying four comprehensive, mutually exclusive types of EM firms’ acquisitions in AMs, which reflect the different motivations and characteristics of EM firms. I then suggest that, in order to be successful, EM firms should undertake those acquisitions that best “fit” their characteristics. In this way, the paper contributes to the extant literature by claiming that the heterogeneous internationalization motives of firms with potentially weak advantages and home institutions – such as EM firms – can be explained by looking at those firms’ antecedents that capture their home contexts’ peculiarities. The paper draws upon the resource-based view (RBV) and the institution-based view (IBV) of the firm, which are often used in studies of EM firms’ strategic behaviour (e.g., Hoskisson et al., 2000 and Peng and Heath, 1996). Based on this framework, the paper links the resource-, institution- and industry-based levels of analysis (Peng, Wang, & Jiang, 2008), which together can explain EM firms’ antecedents to acquisitions in AMs. The theoretical contribution of this paper consists of a new comprehensive approach to the study of EM firms’ acquisitions in AMs, which stresses the importance of heterogeneity in firm characteristics to explaining the motivations behind such acquisitions. EM firms can have very different characteristics and follow a variety of strategies, even when they come from similar institutional contexts and enter similar AM host locations through the same internationalization mode. In this regard, this paper takes the complexity of the phenomenon into account and provides a single comprehensive theoretical framework to address it. This paper enriches the discussion by providing several firm-level examples derived from the under-researched Indian context (Kumar, 2009). After the main period of liberalization, which started in 1991, acquisitions in AMs became the preferred form of internationalization for Indian firms (Athreye and Godley, 2009 and Sun et al., 2012). The theoretical arguments presented here, however, are not India-specific, but apply to EM firms in general. The rest of this paper is organized as follows. Section 2 presents the theoretical background of the study, including possible motivations for EM firms’ acquisitions in AMs and the antecedents to those acquisitions. Section 3 answers the main research questions by developing a theoretical model that identifies four acquisition strategies and links them to the various antecedents of acquiring EM firms. Section 4 presents the conclusions.

The present work studies the phenomenon of upmarket acquisitions undertaken by EM firms, which is an interesting and challenging phenomenon involving firms that originate from institutionally weaker contexts than those found in traditional AMs. The emergence of this phenomenon has fuelled a vivid theoretical debate concerning its potential explanations in comparison to traditional theories based on AM firms. This debate typically focuses on two alternatives. On the one hand, traditional AM-based explanations may be viewed as suitable also for explaining the internationalization of EM firms (see Narula, 2006 and Rugman and Li, 2007). On the other hand, new theoretical alternatives can be developed to help enhance our comprehension of EM firms’ internationalization (see Madhok and Keyhani, 2012 and Mathews, 2006). In particular, EM firms’ upstream acquisitions are sometimes said to be guided by augmenting motivations because EM firms lack traditional exploitable advantages (Duysters et al., 2009, Mathews, 2006 and Mathews and Zander, 2007). At other times, such acquisitions are described as deals based on the exploitation of the acquirer’s advantages abroad, as in the case of AM firms (e.g., Rugman & Li, 2007). Not only are the two streams of research in disagreement, but they also run one risk associated with the study of internationalizing EM firms – the possibility that such firms will be depicted as stereotypes. The paper offers the beginnings of a resolution to this debate by giving a comprehensive overview of EM firms’ antecedents to upstream acquisitions and by discussing how such antecedents guide firms’ motivations for undertaking these investments. The institutionally induced factors that EM firms develop in response to weak home institutions are explicitly included in the analysis. In this regard, the analysis includes both traditional explanations and factors capturing the peculiarities of EM contexts. As such, the paper stresses that the EM firms’ heterogeneity must be considered if we are to understand which motivations should guide EM firms’ upmarket acquisitions. Three types of antecedents, organized in resource-, institution- and industry-based categories, capture this heterogeneity among EM firms. Therefore, the paper extends previous research on EM firms’ internationalization by presenting a more comprehensive view of these firms’ behaviours and choices, thereby overcoming the radical, sometimes oversimplified, previous explanations. The paper has some important managerial implications. First, it can help EM firms’ managers increase their awareness of the need to match the motivations guiding upmarket acquisitions with the heterogeneous antecedents their firms possess. This should lead to a more rational perception of how these firms can be successful in AMs. Second, this discussion should incentivize the managers of both EM and AM firms to develop their awareness of the institutional differences between these groups of countries and to invest in relevant assets when venturing into institutionally dissimilar host countries. Third, the paper can be useful for AM firms’ managers willing to explore which capabilities they should develop when entering EMs and what competencies their local competitors are likely to possess. In this regard, the theoretical framework presented here can assist AM managers in better understanding EM firms and their environment, potentially supporting future interactions. The study has some limitations. First, of the different internationalization modes, the paper focuses only on upmarket acquisitions, which have been found to be particularly relevant for EM firms (see Aulakh, 2007, Bhaumik et al., 2010, Gammeltoft et al., 2010 and Gaur and Kumar, 2010). It would be interesting to examine various internationalization alternatives to see the strengths and limitations of the theoretical model in those contexts. Second, some illustrative Indian firm-level examples have been presented in this study because the Indian context is especially relevant and interesting in terms of upmarket acquisitions. These examples, however, do not provide conclusive results. There is, therefore, an opportunity to validate the findings of the study through the application of the model to empirical data. A future empirical analysis could consider, for instance, Indian and Chinese upmarket acquisitions, which is a common practice in this type of research (e.g., Kapur and Ramamurti, 2001 and Sun et al., 2012). This comparison might be relevant, as Chinese overseas acquisitions are often carried out by state-owned enterprises, while the majority of Indian deals are handled by private sector firms. Furthermore, Chinese firms operate mainly in primary sectors, whereas Indian acquirers are distributed across various industries (Athreye and Kapur, 2009 and Sun et al., 2012). Furthermore, the Indian diasporas are more dispersed in AMs than the Chinese diasporas. This type of comparative empirical analysis could, therefore, be a particularly interesting test of the theoretical model. Finally, the present study has analysed which EM firms’ upmarket acquisition strategies suit different firms’ antecedents. At this point, it would be interesting to look into unsuitable combinations, i.e., “misfits” between strategies and antecedents. For example, in cases of an augmenting strategy with no coherent combination of antecedents, the firm is likely to be unable to recognize and absorb the implied advantages, to incur extra managerial costs and potentially fail in fulfilling its acquisition goals. In the opposite case of exploitation of the firm’s antecedents without a suitable combination of antecedents, the firm will be likely to fail to take advantage of this type of upmarket strategy. To conclude, EMs represent an interesting setting for the study of aspects that are not substantially available or significant in AMs (Gaur & Kumar, 2010). In such contexts, many assumptions underlying traditional theories might need to be re-investigated (Meyer & Tran, 2006). Future investigations should therefore incorporate the context of the research more explicitly.