Internationalization Strategy of MNEs
from Emerging Economies:
The Case of Huawei
Sunny Li Sun
Abstract: With the current rise of multinational enterprises (MNEs) from emerging economies (EE), more attention is now being directed to EE MNEs and what drives the internationalization of these companies. In this article we aim to provide more insights into the strategies and development of EE MNEs by conducting an in-depth study of a Chinese high-tech company in the communications equipment industry: Huawei. Our case study proposes that EE MNEs (1) tend to nurture their capability in the domestic market as a base before internationalization; (2) prefer to enter markets with fewer barriers in cultural, technological, economic, and institutional distances to accumulate experience and move up the value curve; and (3) use inward and outward linkages to complement their strengths and offset their weaknesses in the global market. Our study on the internationalization patterns of EE MNEs enriches and broadens current MNE theory. Keywords: Internationalization, multinational enterprises, emerging economies, value curve
What determines the international success or failure of a firm is a fundamental question in strategy and international business (IB) research (Peng 2004; Rumelt, Schendel, and Teece 1994). Most of the established IB literature has assumed or taken the perspective of how multinational enterprises (MNEs) from developed economies (hereafter DE) successfully enter and effectively compete in other developed or developing countries. With the current rise of MNEs from emerging economies (hereafter EE), more attention is now being directed toward EE MNEs and what drives the internationalization of these companies (Bartlett and Ghoshal 2000; Luo and
Sunny Li Sun, University of Texas at Dallas, School of Management, SM 43, P.O. Box 830688, Richardson, Texas 75083-0688, Tel (972) 883-6041 / Fax (972) 883-6029, email@example.com. In developing this research, I have benefited from helpful discussions with Mike W. Peng, Yanli Zhang, John Cantwell, and Daying Yan. I thank the special issue editor Prof. Rajesh K. Pillania and two reviewers for their excellent guidance. I also appreciate the editing help from Erin Pleggenkuhle-Miles.
Sunny Li Sun
Electronic copy available at: http://ssrn.com/abstract=1528265
THE MULTINATIONAL BUSINESS REVIEW
Tung 2007; Pillania 2009a). However, relatively little is known about how EE MNEs develop their strategies to survive and thrive within the “new world order” as latecomers (Pillania 2009b; Mathews 2006; Ramamurti 2004). In this study, we ask three unique questions: (1) where do EE MNEs’ competitive advantages originate; (2) what constraints do EE MNEs face in their internationalization and how do they deal with them; and (3) how have the EE challengers established themselves successfully against the sometimes fierce resistance of DE MNEs? We expand the influence of the resource-based view (RBV) into traditional theories of internationalization and provide more insights into the strategies and development of EE MNEs through an in-depth study of Huawei, a high-tech Chinese company in the global communications equipment industry. Huawei was established in 1988 and has become one of the leading global telecommunications network solution and equipment providers. In 2008, Huawei rose to become the largest patent applicant in the world under the WIPO Patent Cooperation Treaty (PCT) (No. 4 in 2007).1 Huawei’s revenue rose 36% in 2008 to $17 billion, showing better performance than most of its Western rivals including Ericsson, Alcatel-Lucent, Motorola, Nortel Networks (Nortel filed for bankruptcy protection in 2009), and Cisco, amid the global economic turmoil.2 In January 2008, Huawei won the first global commercial contract to supply equipment for an advanced “fourth-generation”/LTE mobile network in Oslo, Norway. The bid shows...
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