Should leading emerging market companies chase globalization?

Abstract

Purpose

This research study compares the financial success of emerging market companies that have globalized with similar sized EMNC companies that have stayed home.

Design/methodology/approach

One target cohort for this study was the short list of emerging market multinationals (EMNCs) that the Boston Consulting Group (BCG) published yearly from 2006 to 2016. 212 EMNCs were divided into three types: 10;1. Global Leaders – 19 from this list 10;2. Persistent Challengers – 78 companies on the BCG list. 10;3. Challengers – 115 companies were on BCG’s lists in various years. 10; Their financial results were compared with a group of 26 “Local Leaders,” emerging market companies that had revenues of over $10 billion but had not appeared even once on BCG’s list of global challengers. 10;

Findings

Local Leaders show superior financial performance when compared to Global Leaders.

Practical implications

Opportunistic moves to globalize without a sound underlying strategy have backfired on many emerging market companies, resulting in lagging financial performance and sometimes huge write-downs.

Originality/value

A carefully done study that indicates that globalization is not the magic bullet that improves the financial performance of an emerging market company.

Citation

Chakravarthy, B., Abraham, P.C. and Sorell, M. (2020), "Should leading emerging market companies chase globalization?", Strategy & Leadership, Vol. 48 No. 1, pp. 36-42. https://doi.org/10.1108/SL-10-2019-0157