Reasons for the Growth of MNEs from Emerging Economies from a Essay

Reasons for the Growth of MNEs from Emerging Economies from a Theoretical Perspective - Essay Example The author of the essay "Growth of MNEs from emerging economies from a theoretical perspective" explains, MNEs are Multinational Enterprises which operate in many nations as part of their internationalizations strategy. Barlett, Ghoshal and Beamish (2008) provide a similar definition to MNEs, by stating MNEs are â€Å"organizations that have substantial direct investment in foreign countries and actively manage those operations and regard those operations as integral parts of the company both strategically and organizationally.† However, the same type of organization are also referred by other term as well like international firms, multinational companies, transnational or 'global', to supranational, etc in common day usage, in business circles and in various articles and books. This being the case, the term MNEs are used in particular contexts. That is, as pointed out earlier, the organizations that operate in many countries are not simply a MNC or MNE in just the legal sense . Instead, they are â€Å"an aggregate group or network of corporate and non-corporate entities, established under the domestic laws of different nations and thereby endowed with different nationalities†. In that context, the term enterprise or MNE appears to be the most suited for covering all the many and varied forms of corporate and operational interrelationships. (Zurawicki 1979). Thus, due to their extensive operations, they are being influenced by various factors from their origination to every day functioning. This is particularly visible when the MNEs are divided into MNEs from developed countries and MNEs from emerging or developing countries or economies. That is, it is a well known fact that economic advantages, military strength, technological capabilities, even geographical strength and other aspects differentiate and categorize countries of the world as developed, developing and poor countries. This categorization is also visible among the business circles, wit h the organizations categorized into MNEs from Developed countries (DMNEs for short) and MNEs from Emerging countries (EMNEs for short). According to Rugman (2009), â€Å"currently the world's 500 largest MNEs dominate world trade and investment, and in terms of FDI the world's largest firms account for 90 percent of the world total.†. As these MNEs operate in many countries by having subsidiaries, joint ventures, etc., they are making positive impacts all over the world. That is, many MNEs from emerging and least developed countries are also working as part of this large MNE system. â€Å"It is through the activities of this set of very large MNEs that less developed countries are being integrated into the world's economic system.† (Rugman 2009). But, at the same time, when the positions of these DMNEs and EMNEs are compared, it appears that EMNEs are positioned well below DMNEs. That is, although EMNEs from many countries including China, India, Brazil, etc, etc. hav e increased in numbers in the recent decades due to various accentuating factors, they constitute only minority among the largest firms of the world. â€Å"Although their numbers have increased, developing-country firms account for only between 5 and 8.4% of the largest public firms. Moreover, they tend to be present at the lower end of the ranking† (Cuervo-Cazurra and Genc 2008). Even then EMNEs are coming up with optimal strategies to strongly compete with the DMNEs, and in many cases are even overtaking the DMNEs. This paper focusing of these EMNEs will first discuss how certain historic, geographic, cultural and institutional factors acted and are still acting as the disadvantages for the EMNEs, and then will discuss how notwithstanding these disadvantages, the EMNEs are able to compete with established DMNEs through effective strategies. One of the main disadvantages which have been faced by