The emergence of the so-called 'Rising Powers' - including but not limited to China, India, Brazil and Russia - represents one of the key drivers of global economic and social change. The Rising Powers and Interdependent Futures network funded by the Economic and Social Research Council includes 12 research projects at ten universities across the UK that explore these ongoing changes.
Thursday, 12 November 2015
Rising Power multinationals and global development
Huawei phones, Nando’s
chicken, Tata cars – brands from Rising Power countries are present in more and
more countries across the globe. The new multinationals that produce these
brands are increasingly competing with established Western multinationals, in
the Europe and America as well as in Africa and Asia. But what impact do these
Rising Power multinationals have on global development? As they expand their
global operations, how do they influence the economy, people and the
environment? These questions are at the core of a special issue in Critical
Perspectives on International Business.
The developmental promises
and challenges of Chinese, Indian, or Brazilian companies’ international
operations are controversial. One argument in favour of South-South FDI is that
firms from emerging economies might adapt more easily to local realities in a
developing country than multinationals from the US or Europe. So, do they
better understand the needs of low-income consumers, and can they provide these
with goods and services that used to be available only for the rich? Or, on the
other hand, should we believe media reports on land grabbing and giant
infrastructure projects by Chinese or Indian investors that destroy the
environment and harm local communities?
Against this debate, the
special issue takes a closer look at the nature and strategies of these Rising
Power firms. Four articles in the collection look at how capabilities of these
firms differ from those of Western multinationals. First, Peter J. Williamson
finds that Rising Power firms have distinctive capabilities of innovation and
reconfiguration that can give them an edge over competitors. Peter Konijn and
Rob van Tulder examine “Resources-for-infrastructure (R4I) Swaps” as a specific
market entry strategy of Chinese firms in African countries. Taking a different angle, Jaya Prakash
Pradhan and Keshab Das highlight regional differences within Rising Power
countries and their effects on export performance of local SMEs. Further, Rory
Horner shows how the emergence of Rising Power firms in the pharmaceutical
sector has led established multinationals to increase pressure around
intellectual property rights in India and South Africa.
Three further articles
examine how the concept of global value chains (GVCs) can help to understand
Rising Power firms’ developmental impact. Zaheer Khan, Yong Kyu Lew and Rudolf
R. Sinkovics show why Pakistani automobile suppliers have benefited relatively
little from their integration into GVCs. Joonkoo Lee and Gary Gereffi point out that new markets in emerging
economies and new regional value chains can be an opportunity for developing
country firms to upgrade economically. However, they warn of a risk that this
economic upgrading may be accompanied by negative social effects. Finally, contributing
to the debate about the social impact of Rising Power firms, Noemi Sinkovics,
Rudolf R. Sinkovics, Samia Ferdous Hoque and Laszlo Czaban propose a
reconceptualization of social value creation, focusing on the “root causes” of
constraints to creating social value.
Overall, the special
issue contributes both conceptual thinking and empirical insights to the debate
around the developmental impact of Rising Power firms. In sum, the articles
show that there is no easy answer to the question of whether these new Chinese,
Indian or Brazilian multinationals are good or bad for global development. But
one thing is sure: We should keep an eye on them.
For more details, please refer to:
Mo Yamin , Rudolf R.
Sinkovics , (2015) "Rising power firms – the developmental promises and
challenges: an introduction", critical perspectives on international
business, Vol. 11 Iss: 3/4. http://dx.doi.org/10.1108/cpoib-04-2015-0016