Resources

The decision to expand internationally for emerging market companies is often attributed to a desire to escape the constraints of home environments, particularly weak rule of law, underdeveloped financial markets, inconsistent regulatory enforcement, and limited access to capital. However, recent research by Jialin Du and Eric Yanfei Zhao also reveals that a company's standing within its home country can be significantly enhanced by expanding abroad, particularly to developed markets, such as those in Europe and North America.

Emerging markets offer opportunities, but they also present unique challenges, including political risk and instability. Recent research by Yannick Thams and Luis Alfonso Dau highlights how the personal political ideology of a CEO often determines how companies respond to these challenges. Thams and Dau focused on corporate responses to the 2022 Russian invasion of Ukraine, revealing that a CEO's liberal or conservative leanings significantly impacted the likelihood of a company's decision to exit the Russian market.

The Fall 2024 issue of Insights @ Center for Emerging Markets brings together researchers from Northeastern University and the broader global academic community to delve into transformative strategies and practices shaping global business in emerging markets. From the rise of emerging-market firms as leaders in global value chains to innovative governance structures that address sustainability and human rights challenges, the topics offer fresh perspectives and actionable insights for navigating complex market dynamics.

Global supply chains have recently come under greater scrutiny following several high-profile cases of labor abuses, particularly in the wake of the Rana Plaza factory collapse in Dhaka that claimed over a thousand lives. Although international guidelines such as the UN Universal Declaration of Human Rights and ILO International Labour Standards provide a framework for ethical labor practices, their effectiveness is contingent upon consistent enforcement. This can be a formidable challenge when suppliers operate independently from developed-country buyers, often in regions marked by weaker legal systems. 

Most studies on global value chains focus on advanced economy multinationals that develop products in-house and retain high-value added activities, while outsourcing low-value tasks, like component manufacturing and assembly, to emerging market suppliers. However, this dynamic is shifting as increasing numbers of emerging market suppliers are becoming multinationals and exerting control over more value chain activities. Initially positioned as suppliers for western brands, these companies have leveraged their roles in global value chains to learn, acquire advanced capabilities, and strategically expand through acquisitions. Over time, they evolve to compete directly with established players, controlling their industry value chains and becoming global leaders. This shift requires a deeper understanding of how emerging market multinationals differ from their advanced economy counterparts in their strategic use of global value chains.

In Latin America, multinational enterprises (Multilatinas) are increasingly using global cities as springboards for international expansion. Companies like Brazil's Embraer, Vale, and Natura, Mexico's CEMEX and Bimbo, and Argentina's Tenaris exemplify this trend, challenging the traditional view of multinationals originating solely from developed economies. Research by Evodio Kaltenecker and Miguel Angel Montoya Bayardo sheds light on the strategic importance of global cities in the internationalization of these firms.

Multinational companies are increasingly expected to address complex sustainability challenges in their supply chains, including environmental impacts from suppliers, labor conditions (such as child and forced labor), human rights concerns, and resource scarcity. Genuine progress on these issues requires more than top-down directives; it calls for a collaborative approach that involves all stakeholders in clarifying the responsibilities of multinational companies. Recent research by Preuss, Barkemeyer, Arora, and Banerjee highlights that by fostering open communication, building trust, and aligning sustainability goals with the needs of local communities, multinational companies can shift their sustainability initiatives from mere corporate statements to tangible improvements in the lives of suppliers' workers and their families. However, as these initiatives move through different levels of the organization and supply chain, a “funnel effect” shifts priorities—from broad corporate strategy to more immediate, locally relevant concerns at the supplier and workers' levels—highlighting the need to effectively unite these different priorities in a coherent corporate strategy. 

The collapse of the Rana Plaza factory in Bangladesh, a tragedy that injured over 3,500 garment workers, served as a stark reminder of the human cost of opaque global supply chains. In its wake, a renewed focus on human rights within the apparel industry has emerged, pushing businesses to adopt innovative solutions to ensure ethical sourcing and production. Smart disclosures, a technologically driven approach to transparency, is increasingly being utilized by multinational corporations (MNCs) to improve visibility and accountability throughout their supply chains, offering a promising path towards safeguarding human rights.

China's remarkable economic transformation from one of the world's poorest nations to one of its largest economies is linked to its vibrant entrepreneurial landscape. Understanding the factors that nurtured this entrepreneurial spirit is crucial for both academics and business leaders, Wei Wang, Kimberly Eddleston, Francesco Chirico, Stephen Zhang, Qiaozhuan Liang and Wei Deng from China, Australia, the US and Europe delved into the dynamics of Chinese family businesses, exploring how diversity within families influenced entrepreneurial leanings and the important role that family meals play in fostering entrepreneurs.

Aline Gatignon of the Wharton School and Laurence Capron of INSEAD examined how Natura, a leading Brazilian cosmetics company, achieved success by building a strong and collaborative business ecosystem. Faced with underdeveloped infrastructure, limited access to capital, and other institutional weaknesses common to developing countries, Natura adopted a unique strategy, fostering deep relationships with diverse stakeholders, including local communities, suppliers, NGOs, and government agencies. This strategy, focused on empowering communities and building trust, allowed Natura to overcome obstacles, achieve sustainable growth, and generate positive social impact. In light of these achievements, Natura's approach offers valuable lessons for other businesses seeking to thrive in similar environments.