Rajneesh Narula
Professor of International Business Regulation
Director, John H. Dunning Centre for International
Business
Henley Business School
University of Reading, UK
Special issue of the European Journal of Development Research
The Development Effects of Multinational
Enterprises from Developing Countries
Guest editors:
Ari Kokko, Copenhagen Business School
Rajneesh Narula, Henley Business School,
University of Reading
Nonetheless, the
following facts seem to survive scrutiny. First, that DC MNEs
typically invest
less in R&D and have weaker ownership assets than
‘conventional’ MNEs.
Second, their internationalization tends to rely more on
leveraging country-specific advantages and organizational
innovations than
firm-specific ownership assets. Third, the institutional
environment in the home countries of
DC MNEs influences their organization and governance. DC MNEs
are often
organized in diversified business groups and aim for more
horizontal and
vertical integration than what would be optimal in a more
developed market
(Khanna and Yafeh 2007; Hemrit 2011). Fourth, long-term linkages
and networks characterize
the relationships between firms. DC MNEs often rely on
networks with ethnic, linguistic or cultural affinities that
tend to be
relatively closed and built on personalized governance and
control systems.
Fifth, DC MNEs exhibit
a more mixed pattern of ownership than MNEs from developed
countries. Many DC
MNEs are either privately held (e.g. family-owned business
groups) or wholly or
partly owned by the state. Sixth, home governments
support support the internationalization of domestic firms in
order to
strengthen the home economy’s international competitivenes
(Rasiah et al.
2010).
The importance
of FDI to development and growth is a much studied area (e.g.,
Lall and Narula
2004, Narula and Dunning 2010).
In
principle, FDI can raise labor productivity, output, employment,
and incomes
(Blomström et al. 1996). In addition, the literature suggests
that further
gains may arise because of the increased competition and
discipline generated
by foreign firms, from technological, managerial, and
organizational
spillovers, and from learning-by-doing effects in local
suppliers (Hirschman
1958, De Mello Jr. 1997; Blomström and Kokko 1998). Most
contemporary analyses
and national strategies tend to emphasize the positive
potentials inherent in
FDI, but the positive assessment is not unanimous and many
debates remain
unsettled (Narula and Dunning 2010). FDI flows may also have
negative effects
on growth when there is a mismatch between the investment
projects and the host
country’s socio-economic conditions and absorptive capacity. The net effect of FDI also
depends on a
variety other factors such as the host country’s policy
environment, and the
structure of its political and social institutions. If DC MNEs
do differ from
conventional MNEs, it is likely that the development effects of
DC MNEs are
also different.
The purpose of
this special issue of the European
Journal
of Development Research is to explore the development
effects of
MNEs from developing economies. Broadly speaking, the literature
on DC MNEs has
taken an Economics, International Business (IB) or Management
perspective, but we will
deliberately to seek alternative,
more pluralistic (and cross-disciplinary) approaches,
including contributions
from political economy, sociology and anthropology. The
empirical evidence
on the developmental effects of outward FDI/DC MNEs remains
fragmented and
inconclusive: What are the developmental effects of DC MNEs? Are
there tangible
differences between DC MNEs and conventional MNEs in host
countries? Are there
important variations across and between industries, home
countries, and host
countries? How have geopolitical circumstances shaped their
activities? Particular
emphasis should be placed on the development effects that can be
traced from
the special characteristics and behavior of DC MNEs.
Key questions
We welcome papers from a variety of
contexts that advance our theoretical and empirical
understanding of the
processes that shape and determine the developmental dimensions
of DC MNEs,
whether from a sociological, political, or economic perspective.
The
special issue
welcomes a broad range of methodologies in enhancing our
understanding of the
aforementioned processes. These
include
quantitative studies, qualitative and case studies,
multi-country comparative studies,
replication studies and studies of specific projects. Key
questions that may be addressed include:
·
What
are the political economy and sociological causes and
implications of the
growth of DC MNE activity?
·
How
do the operations of DC MNEs in developing countries differ from
“conventional”
MNEs? These differences can refer to technology as well as
organizational capabilities,
marketing, labor relations, and other operational dimensions.
·
Are
the linkages between DC MNEs and local firms different from
linkages between
local firms and conventional MNEs?
·
What
role do home governments play in supporting to DC MNEs?
·
What
are political and sociological effects of DC MNE activity,
relative to
conventional MNEs?
·
Do
DC MNEs affect migration patterns, both within countries and
between countries?
·
Do
DC MNEs follow different strategies in engaging in
resource-seeking activities?
What are the consequences of DC MNE investments in natural
resources?
·
What
are the links between FDI and trade for investors from
developing countries? Do
DC MNEs export back to their home countries, or are their
exports directed
towards third countries (e.g. the developed economies)?
·
What
are the home country effects of FDI from developing countries?
Are the
spillover effects in the home countries, i.e., is technology and
knowledge
diffused from DC MNEs to other firms in the home country?
Proposed time table
The time table
for the proposed special issue is as follows:
We invite
proposals/abstracts/papers to be submitted to the guest editors
by December 1,
2011. First full drafts of the papers should be submitted to
EJDR’s website by March
2012 for formal review. Revised drafts will be presented and
discussed at the
bi-annual OFDI Conference at Copenhagen Business School in
November 2012. Final
manuscripts will be delivered in early 2013, for publication in
Volume 24
(2013) of EJDR. All
submissions need to
follow the EJDR guidelines, and will be subject to a
double-blind review. See www.palgrave-journals.com/ejdr for details.
Selected references
Blomström, M. and A. Kokko (1998)
”Multinational Corporations
and Spillovers”, Journal
of Economic
Surveys, 12(3) 247-277.
Blomström, M.,
R. Lipsey and
M. Zejan (1996), “Is Fixed Investment the Key to Economic
Growth?” Quarterly
Journal of Economics, 111 (1),
269–276.
Child, J. and Rodrigues, S, (2005), “The
Internationalization
of Chinese firms: A Case for Theoretical Extension?”, Management and Organization Review, 1(3), 381-410.
De Mello, L.R.
(1997),
“Foreign Direct Investment in Developing Countries and Growth: A
Selective
Survey”, Journal of
Development Studies,
34, 1–34.
Dunning, J.H., R.V. Hoesel
and R. Narula
(1998), ‘Third World Multinationals Revisited: New Developments
and Theoretical
Implications’, in J.H. Dunning (ed.), Globalization,
Trade, and Foreign Direct Investment, Amsterdam: Elsevier.
Hemrit, M. (2011), Beyond
the Bamboo Network: The Internationalization Process of Thai
Family Business
Groups, Stockholm: Stockholm School of Economics.
Hirschman, A.O. (1958), The Strategy of
Economic
Development. New Haven, Conn.: Yale University Press.
Khanna, T. and
Y. Yafeh (2007),
‘Business Groups in Emerging Markets: Paragons or Parasites?’ Journal of Economic
Literature, 45(2):
331-72.
Kumar, K. and Mcleod, M.G.. (1981) Multinationals from Developing Countries,
Lexington, MA: Lexington
Books.
Lall, S. (1983) The New
Multinationals: The Spread of Third World Enterprises, New
York: Wiley.
Lall, S. & Narula,
R. (2004) FDI
and its Role in economic development:
Do we need
a new agenda, European Journal of Development Research,
16(3),
pp. 447-464.
Lecraw, D.J. (1977), “Direct
Investment by Firms from Less Developed Countries”, Oxford Economic Papers, 29(3), 442–457.
Luo, Y. and R.L. Tung (2007), “International
Expansion of
Emerging Market Enterprises: A Springboard Perspective”, Journal of International Business Studies, 38,
481–498
Mohan, G. and Tan-Mullins, M. (2009) Chinese
Migrants in
Africa as New Agents of Development? An Analytical Framework European Journal of
Development Research,
21, 588–605
Mathews, J.A. (2002) Dragon
Multinational: Towards a New Model of Global Growth, New
York: Oxford
University Press.
Narula,
R. (2006),
“Globalization, New Ecologies, New Zoologies, and the Purported
Death of the
Eclectic Paradigm”, Asia
Pacific Journal
of Management, 23, 143–151.
Narula,
R. (2010), “Much Ado
About Nothing or Sirens of a Brave New World? MNE Activity from
Developing
Countries and its Significance for Development”, Background
Paper for the Perspectives
on Global Development 2010: Shifting Wealth, UNCTAD, Geneva.
Narula, R., Dunning, J.H. (2010).
Multinational enterprises,
development and globalization: some clarifications and a
research agenda. Oxford
Development Studies, 38(3): 263 –
287.
Narula, R., Q. Nguyen (2011), Emerging country
MNEs and the
role of home countries: separating fact from irrational
expectations. University
of Reading Discussion Paper Series
Ramamurti, R. and J.V. Singh (eds.). (2009) Emerging Multinationals in
Emerging Markets,
Cambridge: Cambridge University Press.
Rasiah, R., P.
Gammeltoft, and
Y. Jiang (2010), “Home Government Policies for Outward FDI from
Emerging
Economies: Lessons from Asia”, International
Journal of Emerging Markets, 5 (3/4),
333-57.
Rajneesh Narula
Professor of International Business Regulation
Director, John H. Dunning Centre for International
Business
Henley Business School
University of Reading, UK