The Relative Importance of Equity and Non-Equity Mne Network Ties for Advanced and Emerging Market Multinationals
41 Pages Posted: 15 Jun 2024
Abstract
We conceptualise multinational enterprises (MNEs) as consisting of both intra-firm equity networks and extra-firm contractual networks, and compare and contrast how advanced market multinational enterprises (AMNEs) and their counterparts from emerging markets (EMNs) use these networks. Literature suggests that MNEs with more resources will internationalise using equity, i.e. intra-firm networks, but that extra-firm networks provide greater flexibility and thus profitability. Examining publicly listed MNEs operating in Africa, we find that this holds for established AMNEs, but not for the younger AMNEs. It also does not hold for EMNEs where profitability is generally associated with an intra-firm network specialisation. There is great variability in the EMNE data, and models perform better for samples differentiating between older and younger, and more and less resource-rich EMNEs. Our work suggests that managing extra-firm networks is a capability, and opens various avenues for future research.
Keywords: Multinational, Internationalisation, Real options reasoning, Emerging markets, Equity
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