Center for Emerging Markets

Research by Juan Bu and Alvaro Cuervo-Cazurra shows that new ventures in emerging markets, initially created informally, suffer from costs that persist and constrain a firm's ability to innovate even after they formalize their status. As a result of these informality costs, informally created new ventures are more likely to develop imitative rather than innovative new products. However, being acquired by other firms and improvements in the national innovation system can weaken the persistence of these informality costs, resulting in more innovation. To explain these findings, Bu and Cuervo-Cazurra develop the concept of internal imprinting, which captures how the internal characteristics of a company result in the establishment of practices that persist over time, affecting behavior and innovation. Managers in emerging markets should consider formalizing their firms from the beginning or joining a private business group to mitigate the negative impact of informality on their firms' innovativeness.

In 1972, Nairobi, Kenya became the first developing country to host the headquarters of a UN organization, the UN Environment Programme (UNEP). UNEP's presence in Nairobi has increased Kenya's global governance stature. However, it has not fulfilled the promise of promoting greater input from developing countries. The location has posed challenges to UNEP, including security concerns, recruitment and retention of staff, communication and infrastructure difficulties, and the need for resources. Professor Ivanova's recent book about UNEP's first 50 years identifies practical ways for improving its effectiveness as a premier multilateral institution for addressing the grand environmental challenges of our time.

Chinese companies are reinventing management through an approach called “digitally enhanced directed autonomy” (DEDA). DEDA uses digital platforms to give frontline employees direct access to corporate resources and capabilities, allowing them to organize themselves around business opportunities without managerial intervention. Autonomy is directed where it is needed and tracked. By giving teams the freedom to design, produce, and sell their products, companies can foster innovation, increase employee engagement, and improve customer satisfaction. The authors use case studies to examine how Chinese companies utilize DEDA and how Western companies might learn from it.