Emerging Market Strategies in Advance Markets: a Two Part Analysis of Home Country Influence

Large and bold acquisition attempts by emerging market firms (EMFs) have drawn the attention of the business press and academic research alike. EMFs are successfully venturing into industries that were previously dominated by select advanced market firms. In response, international business (IB) research has attempted to understand the capabilities, behaviors and motivations of emerging market firms. However, the general and specialized theories produced by this research are not sufficient to explain all EMF behaviors.The purpose of this dissertation is to present and test elements of an integrated theory addressing the current theoretical shortfalls. Specifically, I integrate three specialized theories with the OLI paradigm to explain the behavior of a larger set of EMFs. This integrated theory is based on the idea that EMFs are not monolithic, but are heterogeneous due to their distinct home country environments. That is, the state of home country institutional and resource environments create unique opportunities and constraints for EMFs. Thus, EMF investments towards advanced markets and specific behaviors are in response to their unique home country environments. The theory is presented and tested in two parts.Part 1, examines the influence of EMF home country institutional development and resource endowments on the scale of outward foreign direct investments (OFDI) directed towards advanced markets. Its findings suggest that the home country’s institutional development, factor market development, capital market development and technological readiness do indeed influence the volume of OFDI directed towards advanced markets by EMFs.In part 2, I argue that home country institutional quality, factor market development and capital market development influence three forms of EMF behavior in advanced market firm acquisitions- ownership concentration, target valuation and risk mitigation. The analysis of 4,161 EMF acquisitions in advanced markets largely supports the argument that the state of home country environment influences EMF acquisition behaviors