Value Added Essay

Submitted By liem90
Words: 999
Pages: 4

The emergence of a “second wave” of developing country multinational enterprises (MNEs) in a variety of industries is one of the characterizing features of globalization. Emerging markets’ MNEs (EM-MNEs) may follow quite different patterns to reach, or at least approach, global competitiveness. This paper will investigates how three EM-MNEs pursued global growth through accelerated internationalization combined with strategic and organizational innovation. Haier (China), Mabe (Mexico) and Arçelik (Turkey) emerged as multinationals in the large home appliances (so-called “white goods”) industry.
Emerging market MNEs use and leverage various kinds of strategic and organizational innovations in order to establish a presence in industrial sectors already heavily populated with world-class competitors. In doing so, such firms benefit from a narrow window of opportunity available to them as latecomers. First, they all internationalize very rapidly—so accelerated internationalization is a distinctive feature that calls for analysis. Second, they have been able to achieve this accelerated internationalization not through technological innovation, but through organizational innovations that are well adapted to the circumstances of the emergent global economy, providing linkages with incumbents in innovative ways. They have been able to implement these approaches through strategic innovations that enable them to exploit their latecomer and peripheral statuses to advantage.
This paper will give some managerial implications on the extent to which the experience of these firms is useful (replicable) for other firms struggling to move up the value-added and technology ladder. The three companies have internationalized through exports, built their own resource capabilities, and rapidly expanded internationally through acquisitions of brands and production operations, as well as Greenfield investments. They have also benefited from the great dynamism of the domestic market, although in a context of trade liberalization and decreasing margins. They have succeeded in seizing opportunities available in the global economy to generate linkages with existing players, initially through OEM contracts, and built rapidly on them to establish their own brands and production facilities around the world. There are three of the characteristics identified above to make the point that these three EM-MNEs have pursued different strategies from incumbents to succeed in becoming players in the global economy.
Accelerated internationalization through linkages
To varying degrees, the three firms under study have used participation in global value chains and OEM arrangements to overcome problems of market intelligence and uncertainty regarding the quality of knowledge potentially available. These linkages have provided initial involvement in the global economy. For example: compared to Mabe and Arcelik, Haier has been the fastest to internationalize. It leapfrogged beyond OEM to internationalize through acquisitions and Greenfield investments in all regions, starting in Asia in 1995, in the US in 1999 and in Europe in 2001.
Strategic and organizational innovation: knowledge leverage
The latecomer's critical starting point is its focus on securing access to resources that would otherwise have been unavailable. All three firms invested heavily in R&D and innovation in order to generate their own distinctiveness, as witnessed by numerous national and international awards received over the last years and the number of registered patents. The total number of registered patents as of May 2006 was: Arçelik (8 in US, 51 in Europe), Mabe (3 in US), and Haier. In terms of organizational capabilities, these firms adopted numerous innovations to accelerate globalization.
Building global brands
The governance of the white goods industry presents opportunities and challenges to EM-MNEs. Over this period they have built strong brands, acquired those of competitors, and…