Article

Adjustment of MNE Geographic Market Strategy in Responding to the Rise of Local Competitors in an Emerging Market

J.T. Li and Zhenzhen Xie

in The Oxford Handbook of Management in Emerging Markets

ISBN: 9780190683948
Published online September 2018 | e-ISBN: 9780190683979 | DOI: https://dx.doi.org/10.1093/oxfordhb/9780190683948.013.15
Adjustment of MNE Geographic Market Strategy in Responding to the Rise of Local Competitors in an Emerging Market

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Emerging economies are characterized by weak institutions but also a very dynamic competitive landscape. This chapter proposes that MNE subsidiaries may have to adjust their geographic market strategies as a response to the rise of local competitors. Information on 25,161 manufacturing subsidiaries exporting from China during 2005–2007 was analyzed to show that the export intensity of an MNE subsidiary first increases and then decreases with the export volume of the subsidiary’s local Chinese competitors in the same industry and with the same destination country. Subsidiaries that are older or more tightly controlled by their MNE parents are less likely to respond to the exporting of their Chinese competitors by changing their exporting intensities. Better developed market-supporting institutions make MNE subsidiaries more sensitive to the impact of Chinese local exporters.

Keywords: MNE subsidiary; geographic market strategy; local competitor; exports; emerging economies; China

Article.  9035 words. 

Subjects: International Business

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