Focused and ambidextrous catch-up strategies of emerging economy multinationals. Issue 6 (December 2020)

• Record Type: Journal Article
• Authors: Choi, Yoona; Cui, Lin; Li, Yi; Tian, Xizhou
• Is Part Of: International business review. Volume 29:Issue 6(2020:Dec.)
• Publication Date: 2020-12
• Subjects: Strategic asset seeking -- Foreign direct investment -- Emerging multinational enterprises -- Ambidexterity; International business enterprises -- Periodicals; 338.8805
• DOI: 10.1016/j.ibusrev.2019.01.002
• Languages: English
• ISSNs: 0969-5931

Abstract

Highlights: EMNEs can implement their global catch-up strategy in a focused or ambidextrous manner. The choice between these different catch-up strategies is influenced by industry munificence. This industry effect is magnified by the functional diversity of the top management team. Panel data of Chinese multinational enterprises over 2005–2010 support these theoretical predictions. Abstract: Many emerging economy multinationals (EMNEs) conduct asset-seeking foreign direct investment as a strategy to catch up to global market leaders. This catch-up strategy can be implemented in a focused (purely exploratory) or ambidextrous (simultaneously exploratory and exploitative) manner. This study examines the influence of industry environment on EMNEs' adoption of these catch-up strategies. Integrating an industry-based view with an upper-echelon perspective, we argue that industry munificence promotes a focused catch-up strategy but hinders the ambidextrous alternative. These opposing effects are further magnified by the functional diversity of EMNEs' managerial teams because functionally diversified teams are more likely to allocate attention to external cues in the industrial environment, as opposed to forming a unified strategic orientation internally. Using a panel of EMNEs from China over the period of 2005–2010, we find strong support for our main effects of industry munificence on both catch-up strategies and the moderating effect of managerial team's functional diversity towards ambidextrous catch-up strategy.