The applicability of extant theories to EM MNEs has already been discussed in the earlier section. There is a steady stream of literature in IB and International Management implying that newer theories are indeed required (Bonaglia et al., 2007; Madhok and Keyhani 2012; Mathews, 2006; Lou and Tung, 2007). However, there is a contradicting school of thought that sees these EM MNEs as regional players unlike the conventional MNEs who are global players. Hence examining the applicability of the traditional approaches on these regional players is not perceived to be worthwhile and hence regional strategies are found to be more appropriate (Rugman, 2008). The study also concludes that these Chinese MNEs are more likely to depend on their CSAs (country specific advantage) of cheap labour. When it comes to developing FSAs required for global expansion, they are considerably behind their advanced counterparts in developed countries and have a long way to go. EM MNEs are more likely to rely on home CSA during initial stages of their evolution and would acquire FSAs as operations span globally (Ramamurti, 2009). Hence the conclusion boils down to the fact that new theories are not required in explaining their activities in economies of scale. This view has also been supported by others who argue that (Dunning et al., 2008) the conditions in which the EM MNEs and conventional MNEs internationalised are different and could be mainly attributed to the effects of globalisation. There also have been attempts to extend extant theories in terms of some of its assumptions and implicit conditions (Cuervo- Cazurra, 2012). But such extensions make the theories suitable for specific conditions. Further, EM MNEs are in early stages of internationalisation when the home country has a considerable influence in terms of the advantages and
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disadvantages it offers (Cuervo-Cazurra, 2012). Another factor that influences their internationalisation is the influence of the owners (state owned and family owned) of these EM MNEs who could have non-business objectives for internationalisation. Further, they ventured abroad in the late 20th century in a more liberalised world which was more closely interlinked with sophisticated infrastructure and communication technologies which aided their internationalisation. They are also in the early stages of their internationalisation and as they evolve more into full- fledged and mature MNEs with operations around the world, it is argued that the differences between EM MNEs and conventional MNEs will start to dwindle and may not require separate theories (Cuervo-Cazurra, 2012).
Hennart (2009, 2012) and Ramamurti (2009) have also questioned one of the assumptions of OLI that regards CSA’s to be freely available to all firms in a host country. Hennart (2012) in his bundling model argues that operations in host markets require the bundling of intangibles (technology and brand names) with complementary local resources (local consumer tastes, inputs/local resources for local production and other logistics). The local firms monopolise most of these complementary local resources in EM. This control that they have over the local resources gives them the power to negotiate with foreign MNEs for their technology in exchange for the local resources and thus earn the rents from the bundling (Hennart, 2012). The EM MNEs use these rents to acquire and access the technology and brands which could in turn lead to FDI when they venture abroad. The intangibles that they acquire in the process helps them compete with the foreign MNEs at home and eventually worldwide.
The next school of thought argues strongly for newer theories and frameworks to explain the motivations and paths of internationalisation of EM MNEs (Bonaglia et al., 2007; Buckley et al., 2007; Madhok and Keyhani, 2012; Lou and Tung, 2007; Mathews, 2006; Guillen and Garcia-Canal, 2009; Li, 1998). The LLL framework (linkage-leverage-learning) has made an attempt to explain the rapid internationalization of EM MNEs (Mathews, 2006). This view argues that the rapid or dynamic expansion strategy was essential for many of them to overcome several constraints they had to deal with. The framework is consistent with the RBV and details the evolution in the context of the challenger EM MNEs from Asia Pacific
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region (Mathews, 2006). This framework for the latecomers is based on utilizing the strategies of international linkage and leverage to attain global competitiveness that earlier frameworks like OLI did not account for. The EM MNEs use joint ventures and other collaborative partnerships (linkage) to gain entry into foreign markets, leverage the full potential of the resources at their disposal, and learn in a cumulative fashion (Mathews, 2006). On a similar note, the springboard perspective (Lou and Tung, 2007) also aims to explain the internationalisation of EM MNEs using outward investments as a means to springboard to acquire strategic assets. The springboarding that these MNEs display is seen to be recursive in nature and is more of a deliberate attempt to achieve strategic gains much beyond gaining latecomer advantages which they use to overcome the liabilities and weakness they have. The EM MNEs have inherent weaknesses lacking the state-of-the-art technology, facilities (Lou and Tung, 2007) and without strong global brands. Their internationalisation patterns in developed countries are quite radical and some of them have even transformed their rivals into alliance partners. Another model of internationalisation proposed by Guillen and Garcia-Canal (2009) discuss the accelerated internationalisation by developing MNEs with strong political capabilities, weak competitive advantages and high organizational adaptability who use alliances and acquisitions in developing and developed countries (Cuervo- Cazurra, 2012) to expand abroad. Another model, the spiral co-evolutionary model (Li, 1998; Li, 2003) is stated to be capable of describing, explaining and prescribing spatial and temporal pattern of MNE evolution as in the case of latecomer MNEs from developing world. In this context, the evolution of these MNEs is seen as a revolving process rather than a trend towards equilibrium as dictated by the conventional FDI theories. This pattern is visible behind the internationalisation of the ACER group in Taiwan. The traditional OLI, IDP and the new LLL Model could be readily integrated into the content-process framework of MNE evolution (Li, 2007) and is proposed to better explain the phenomenon for all types of MNE.
Having seen the different schools of thoughts on the relevance of theories that are suitable for EM MNEs, caution has to be exercised before making any generalisations when it comes to the EM MNEs as they are not a homogeneous group (Ramamurti, 2009; Lou and Tung, 2007). Based on the FSA and CSA that these MNEs enjoy, they could follow different internationalization trajectories. The
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evolution of some of these MNEs has been quite rapid to keep up with the demands of the time to acquire global competitiveness. They have been very quick at adapting themselves to latest technologies, new environments, process and systems which is in accordance with the Mathew’s (2006) learning framework. All this strongly suggests the crucial role of knowledge, the means of acquiring and the mechanism of integrating this knowledge to evolve into innovative and globally competitive MNEs and more importantly at an amazing pace.