The international growth of emerging market firms : evidence from a natural experiment

The recent international growth of some firms from emerging markets has attracted the attention of academics and managers alike. How do such emerging market firms achieve growth in international markets despite lacking foreign market knowledge and international competitiveness, and despite facing weak institutions in their home countries? The authors address this question by proposing a new concept—global market capital, the set of assets that prepare emerging market firms to compete globally. Global market capital consists of three elements: leadership capital (at the individual level), foreign marketing and financial capital (at the firm level), and network capital (at the inter-firm level). The authors argue that, taken together, these elements enable emerging market firms to overcome their weaknesses in foreign market knowledge, international competitiveness and home institutions. In particular, the authors highlight the prominent role that leadership capital, specifically CEOs’ foreign market experience, plays in helping emerging market firms grow internationally. The authors test their thesis using uniquely compiled data on Indian firms from the Bombay Stock Exchange 500 index. The Indian context helps to set up a natural experiment in which the independent variables of interest are measured prior to a major sudden and unanticipated regulatory shift in India’s outward investment policy and the dependent variable (international growth) is measured after this policy shift. Results from the paper highlight the crucial role of leadership capital in driving international growth both directly and through its synergistic interaction with the other elements of global market capital

Legacy Effects in Radical Innovation: A Study of European Internet Banking

How do firms cope with the challenges of disruptive change in their industry? Numerous studies have highlighted that success with any prior technology creates a negative legacy effect for the next radical technological shift. We question the overly pessimistic view of such legacy effects and ask how quickly firms embrace technological breakthroughs by radically innovating and who wins in the longer term? In this paper, we argue that legacy is a multi-faceted construct whose diverse aspects could simultaneously have different effects on innovation speed and market performance. We identify three main types of legacy related to technology, organizational, and country-level influences. Previous research tends to focus on technological or market effects in isolation, whereas we seek to study the effects of both firm and country legacy simultaneously on speed to radical innovation and market performance over time. Based on a conceptual framework we develop six hypotheses concerning the legacy effects on initial speed radical innovation and subsequent market performance. We chose the European retail banking industry and the focal innovation of transactional Internet banking as a suitable empirical context to employ quantitative hypothesis testing. Detailed and longitudinal (1996-2001) data were collected for a sample of 123 banks from six European countries: United Kingdom, Germany, France, Sweden, Finland, and Denmark. We specified a model and used threestage least squares (3SLS) as a method to estimate simultaneous regression equations due to endogeneity of a key variable. We show that the prevailing negative view of legacies is likely to be overstated

Managing dilemmas of resource mobilization through jugaad : a multi‐method study of social enterprises in Indian healthcare

This study focuses on the dilemmas that social entrepreneurs encounter and the practices used to manage dilemmas over time. Using a multi‐method approach involving event structure analysis and an inductive multiple case study, we find that four key organizational practices - asset multiplication, leveraging human capital, building social embeddedness, and affordable quality - embody the jugaad elements of frugality and inclusivity. Adding to the social entrepreneurship literature, this study demonstrates that the jugaad approach is conceptually distinct from bricolage and relevant to the study of social enterprises' resource mobilization processes. How do social enterprises encounter and manage dilemmas over time in emerging markets? The present study responds to this question, finding that social entrepreneurs mobilize resources and overcome dilemmas using the practices of jugaad, the “Indian method” of problem‐solving. These jugaad practices can be used to build and allocate resources and create trade‐offs among the jugaad elements of frugality and inclusivity. Based on our results, we recommend that social entrepreneurs pay close attention to how to proceduralize human assets, which would allow these entrepreneurs to build training systems that are highly task‐focused and replicated across functions. We also encourage social entrepreneurs to work in rural markets and seek wider resource pools within these markets by building social embeddedness in rural communities.Projekt DEA

Legacy effects in radical innovation: A study of European Internet banking

How do firms cope with the challenges of disruptive change in their industry? Numerous studies have highlighted that success with any prior technology creates a negative legacy effect for the next radical technological shift. We question the overly pessimistic view of such legacy effects and ask how quickly firms embrace technological breakthroughs by radically innovating and who wins in the longer term? In this paper, we argue that legacy is a multi-faceted construct whose diverse aspects could simultaneously have different effects on innovation speed and market performance. We identify three main types of legacy related to technology, organizational, and country-level influences. Previous research tends to focus on technological or market effects in isolation, whereas we seek to study the effects of both firm and country legacy simultaneously on speed to radical innovation and market performance over time. Based on a conceptual framework we develop six hypotheses concerning the legacy effects on initial speed radical innovation and subsequent market performance. We chose the European retail banking industry and the focal innovation of transactional Internet banking as a suitable empirical context to employ quantitative hypothesis testing. Detailed and longitudinal (1996-2001) data were collected for a sample of 123 banks from six European countries: United Kingdom, Germany, France, Sweden, Finland, and Denmark. We specified a model and used threestage least squares (3SLS) as a method to estimate simultaneous regression equations due to endogeneity of a key variable. We show that the prevailing negative view of legacies is likely to be overstated.innovation, legacy, internet banking, europe

Behemoths at the Gate: How Incumbents Take on Acquisitive Entrants (and Why Some Do Better Than Others)

Corporate acquisitions are a ubiquitous feature of today's business landscape and a widely used means by which large firms enter new markets. As large acquirers swoop in to acquire firms in new markets, they are almost inevitably met with a chorus of concerns about the potential effects of their actions on the markets they enter. What is the actual impact of acquisitive entry by large firms on the strategies and performance of incumbents? How do incumbents reconfigure the way they compete after a behemoth enters their market? The authors focus on an important facet of firms’ competitive positions—their product mix—and propose a framework that explains incumbent firms’ reaction to acquisitive entry by large firms, as well as the performance implications of these reactions. They test the hypotheses that result from this framework by examining the impact of acquisitive entry across a large number of firms and consumer markets over time: The data cover 839 acquisitions in 583 metropolitan statistical areas in the U.S. banking industry. The results indicate that incumbents are more likely to align their product mix strategy with that of the acquisitive entrant if (1) the incumbent is large, (2) the acquirer's past performance has been strong, and (3) the market served by the incumbent is small. Importantly, how incumbents react has significant performance implications: The authors find that large incumbents that deviate from acquirers’ product mix strategy perform better than other incumbents do. </jats:p