Banerjee, Sourindra, Prabhu, Jaideep C. and Chandy , Rajesh (2013) The international growth of emerging market firms : evidence from a natural experiment. Working Paper. Coventry, UK: University of Warwick. WBS Working Paper .

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Abstract

The recent international growth of some firms from emerging markets has attracted the attention of academics and managers alike. How do such emerging market firms achieve growth in international markets despite lacking foreign market knowledge and international competitiveness, and despite facing weak institutions in their home countries? The authors address this question by proposing a new concept—global market capital, the set of assets that prepare emerging market firms to compete globally. Global market capital consists of three elements: leadership capital (at the individual level), foreign marketing and financial capital (at the firm level), and network capital (at the inter-firm level). The authors argue that, taken together, these elements enable emerging market firms to overcome their weaknesses in foreign market knowledge, international competitiveness and home institutions. In particular, the authors highlight the prominent role that leadership capital, specifically CEOs’ foreign market experience, plays in helping emerging market firms grow internationally. The authors test their thesis using uniquely compiled data on Indian firms from the Bombay Stock Exchange 500 index. The Indian context helps to set up a natural experiment in which the independent variables of interest are measured prior to a major sudden and unanticipated regulatory shift in India’s outward investment policy and the dependent variable (international growth) is measured after this policy shift. Results from the paper highlight the crucial role of leadership capital in driving international growth both directly and through its synergistic interaction with the other elements of global market capital.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management H Social Sciences > HF Commerce
Divisions:	Faculty of Social Sciences > Warwick Business School > Marketing Group Faculty of Social Sciences > Warwick Business School
Library of Congress Subject Headings (LCSH):	Economic development -- Mathematical models, Globalization , Developing countries -- Economic conditions, Economic development, Industrialization , Business enterprises -- Finance, Leadership
Series Name:	WBS Working Paper
Publisher:	University of Warwick
Place of Publication:	Coventry, UK
Official Date:	July 2013
Dates:	Date Event July 2013 UNSPECIFIED
Institution:	University of Warwick
Status:	Not Peer Reviewed
Access rights to Published version:	Open Access
Related URLs:	Author

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