Question

Brazil and India are beginning to challenge the dominance of developed country MNE. What are some advantages that these firms from emerging markets bring to their global business?

Answer 1

The advantages that the multinational enterprises (MNE's) from emerging markets have are as follows:

1) The MNE's from developing countries are better equipped to expand in other developing countries. Since the challenges faced by developing country MNE's in developing countries are similar to the challenges these MNE's face in their home country, they are better equipped to handle these challenges. Poor infrastructure, poor investment, corruption are some of the challenges that have to be overcome in developing countries. Developing country MNE's are better equipped than developed country MNE's to overcome the obstacles that are present in developing countries.

2) Furthermore, since the developing country MNE's are smaller in size they can grow faster using a similar business model as a developed country MNE's. In addition, the developing country MNE's can raise money in equity capital markets in developed countries. A company from Brazil or India operating in many different countries can raise money through the NYSE (New york stock exchange) or Nasdaq using an ADR (American Depositary Receipt) to further expand its operations.

3) Emerging market MNE's are more flexible in their hiring practices. The emerging market MNE's usually have global operations. They are then able to select employees from both the home country as well as the foreign countries where they operate. Therefore, the developing country MNE's are choosing employees from a larger talent base. On the other hand, developed country MNE's prefer to hire developed country people in positions of power and autonomy. As a result, the emerging market MNE's hire more talented employees based on their ability rather than their nationality.