Internationalisation of state-owned and
private-owned enterprises from BRICS countries
Bim Breukink Student number: 10184090
Date: June 24 2016
MSc Business Administration: International Management University of Amsterdam
Master Thesis
Supervisor: Dr. Niccolò Pisani Second Reader: Dr. Ilir Haxhi
Statement of originality
This document is written by student Bim Breukink who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.
The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
Abstract
As emerging market multinational enterprises (EM-MNEs) increase their presence in the global market place, studying their internationalisation provides an interesting subject for research. Although much research is done on internationalisation of EM-MNEs, few studies focus on the internationalisation of EM-MNEs by making a distinction between the different ownership structures. The observation prevails that state-owned enterprises (SOEs) prioritise political objectives when internationalising, while private-owned enterprises (POEs) are driven more by commercial goals. This paper investigates the relationship between ownership structures and internationalisation of EM-MNEs using a sample of the 100 largest firms in each of the BRICS countries in 2014 based on their turnover. Internationalisation is measured according to a firm’s scale and scope. Furthermore, this study investigates the moderating effect of R&D investment on the relationship. The findings suggest that SOEs are negatively related to the scale of internationalisation and despite using R&D investment as a moderator no significant effect is found on the aforementioned relationship.
Keywords: Emerging markets; Emerging market multinational enterprises; State-owned enterprises; Private-State-owned enterprises; Internationalisation; R&D investment
Table of content
Table of Contents
1. Introduction... 5 2. Literature Review... 8 2.1 Emerging markets... 8 2.2 EM-MNEs ... 9 2.3 Ownership...11 2.3.1 State-owned enterprise (SOEs) ...14 2.3.2 Private-owned enterprises (POEs) ...15 2.4 Scale and scope of internationalisation...16 2.5 Research gap ...20 3. Theoretical framework... 21 3.1 Ownership and scale of internationalisation ...21 3.2 Ownership and scope of internationalisation...22 3.3 R&D investment...24 4. Methods... 27 4.1 Sample and data collection ...27 4.2 Measures...28 4.2.1 Dependent variable...28 4.2.2 Independent variable ...29 4.2.3 Moderator...29 4.2.4 Control variables...30 4.3 Statistical Analysis and results...30 5. Discussion... 35 5.1 Academic relevance ...35 5.2 Managerial implications...37 5.3 Limitations and suggestions for future research ...37 6. Conclusion... 38 Acknowledgement... 41 References... 42 List of Figures Figure 1. Conceptual model……….……….………26List of Tables Table 1. Descriptive statistics, means, and standard deviations and correlations………31
Table 2. Regression results with dependent variable: scale of internationalisation………….34
1. Introduction
In the last decade internationalisation of emerging market multinational enterprises (EM-MNEs) has expanded remarkably. According to United Nations Conference for Trade and Development (UNCTAD) in 2015, EM-MNEs reached around $468 billion in foreign direct investment (FDI) corresponding to 35% of global FDI in 2014 (UNCTAD, 2015). As EM-MNEs expand their presence in the global market place, international business (IB) research on their internationalisation has grown extensively (Amighini, Rabellotti, & Sanfilippo, 2013; Hong, Wang, & Kafouros, 2015; Jormanainen & Koveshnikov, 2012). This is especially the case in firms from Brazil, Russia, India, China and South Africa, known as the BRICS countries, a term first coined by Jim O’Neill from Goldman Sachs, referring to a group of countries that have the potential of becoming world-leading economies (O’Neill, 2001).
A review of existing literature on the internationalisation of EM-MNEs leads to the following observations. While a number of IB scholars (e.g. Banalieva & Santoro, 2009; Jormainen & Koveshnikov, 2012; Luo & Tung, 2007) study the internationalisation of EM-MNEs, only a few focus on the relationship between internationalisation and the different ownership structures of EM-MNEs (Amighini et al., 2013; Liang, Lu, & Wang, 2012; Ramasamy, Yeung, & Laforet, 2012). However, in these studies the scholars confine themselves to studying the relationship between ownership structure and internationalisation in one EM. Hence it is of interest to investigate the relationship between state-owned enterprises (SOEs) versus private-owned enterprises (POEs) and internationalisation of EM-MNEs in multiple EMs. So far, IB research pays little attention to the international activity of SOEs, largely due to the fact that their focus is domestic rather than international. Yet, as Hong et al.
(2015) have pointed out, the presence of SOEs in the global market place has increased. This paper looks at their internationalisation from the perspective of all five BRICS countries.
Looking at these issues from the perspective of the BRICS countries, this study sheds light on the relationship between ownership structures and internationalisation of EM-MNEs. Internationalisation is defined as “the process of firms’ becoming integrated in international economic activities” (Mathew, 2006: 16). As
Cuervo-Cazurra, Inkpen, Musacchio and Ramaswamy (2014) point out that
internationalisation of SOEs and POEs differ. Where POEs are driven by commercial goals, SOEs are mainly driven by political objectives, national policies and involve other stakeholders. The question arises whether moderating factors play a role. One of the moderating factors is R&D investment. This paper investigates whether R&D investment moderates the relationship between ownership and internationalisation of EM-MNEs.
In order to identify this relationship, internationalisation is measured. In this paper it is measured by the scale and scope of internationalisation. Scale is measured by a firm’s foreign sales over total sales. Scope refers to a firm’s regional versus global focus, measured by global sales over total sales.
To assess the relationship between ownership structures and the scale and scope of internationalisation this paper addresses two questions. First, how is EM-MNEs’ SOEs versus POEs related to their scale and scope of internationalisation? Secondly, does R&D investment positively moderate the relationship between SOEs versus POEs and their scale and scope of internationalisation?
Following Luo and Tung’s (2007) definition, EM-MNEs are defined as “firms that originated from emerging markets and engage in outward foreign direct
investment, where they exercise effective control and undertake value-adding activities in one or more foreign countries” (Luo & Tung, 2007: 482). This paper
considers the 100ranked EM-MNEs of each BRICS country by turnover. The data are
drawn from ORBIS, complemented by information on foreign sales, global sales and R&D investment from annual reports. Although it is hard to generalize when
considering different EMs over various industries as Gammelthoft, Barnard and
Madhok (2010) point out, this paper follows Luo and Tung’s (2007) observation that EMs tend to have comparable gaps in the institutional environment and face similar challenges when internationalising.
This implies that this paper contributes to IB research by integrating different perspectives on the internationalisation of SOEs versus POEs. Furthermore, by considering both the scale and scope of internationalisation, this study offers an insight in internationalisation in relation to the ownership structures. In addition, this study also reflects on the moderating role of R&D investment on the relationship between ownership and internationalisation.
The structure of this paper is as follows. The first section highlights developments in EMs, EM-MNEs, ownership structures in EMs including their key differences and the scale and scope of internationalisation. The next section provides the theoretical framework and the hypotheses. The following chapter discusses the data collection, measurement variables and the data analysis. This section also includes the results from the statistical analysis. The fifth section contains the discussion on the data, the implications and the limitations of this research. The final section presents the conclusion based on the findings.
2. Literature Review
2.1 Emerging markets
Scholars discuss the concept of emerging markets from different perspectives (e.g. Jormainen & Koveshnikov, 2012). This paper focuses on the BRICS countries. Following the definition by Luo and Tung (2007) of EMs which are “countries whose national economies have grown rapidly, where industries have undergone and are continuing to undergo dramatic structural changes, and whose markets hold promise despite volatile and weak legal systems” (Luo & Tung, 2007: 483). This definition is the appropriate as it draws attention to the speed of the growing economies with the rapid changes in volatile and weak institutional environments. When looking at internationalisation in EMs it is important to bear in mind the observation of Gammeltoft et al. (2010: 95) that states that “emerging and developing economies constitute a tremendously diverse population of countries”, which implies that “generalization of the group of countries should only be asserted with the utmost caution”. Even though scholars agree that EMs are heterogeneous, Luo and Tung (2007) argue that they face comparable gaps in their institutional environments, challenges when internationalising, and have comparable internationalisation motives. Luo and Tung (2007) support their point of view with examples such as underdeveloped stock markets, lack of global experience and professional expertise. Also lack of process and product innovation continues to challenge EMs’ growth in the global market place.
When looking at the development of internationalisation in EMs several push and pull factors are at play. Jormanainen and Koveshnikov (2012) identify various factors in their research on internationalisation in EMs between 2000-2010. Push factors are institutional gaps such as high savings, capital market distortions or a weak
legal system (Jormanainen & Koveshnikov, 2012). At the same time promotion policies developed by local government serve as a stimulating factor. Pull factors also play a role. A pull factor is the realization of latecomer disadvantages and the need to increase the value-adding activities of EM-MNEs outside the home country by fast internationalisation (Jormanainen & Koveshnikov, 2012). In addition, fast internationalisation creates social capital that helps EM-MNEs to build alliances or
partnerships with MNEs from developed economies (Hoskisson, Wright, Filatotchev,
& Peng, 2013).
2.2 EM-MNEs
EM-MNEs are defined as “firms that originated from emerging markets and engage in outward foreign direct investment, where they exercise effective control and undertake value-adding activities in one or more foreign countries” (Luo & Tung, 2007: 482). The drive to internationalise in EM-MNEs is stimulated by the overall
development of the home country economies in the last decade (Buckley, Elia, &
Kafouros, 2014; Jormanainen & Koveshnikov, 2012; Luo & Tung, 2007). However, changes within the home countries are taken place. Growth rates in home countries are slowing. Rapid, resource-intensive, investment-led growth is giving way to a more consumption and services oriented economy (The Economist, 2013), which can be considered as a push factor to internationalise. Nevertheless, the expectation is that about 70% of the world's growth over the next few years is to come from EMs, with 40% coming from just two countries, China and India (The Economist, 2010). However, the BRICS countries still face a number of challenges to live up to these expectations.
One of the challenges is the difference of governmental structures with regard to
direct economic activity and to preserve their economic power (The Economist, 2010). In this way, governments affect EM-MNEs decisions to internationalise (Luo, Xue, & Han, 2010). An example is found in the Chinese economy, which is centrally steered by the Chinese government. The governmental organ decides which sectors are important. This leads to centralized decisions with regard to internationalisation of firms. Furthermore, it leads to centralized decisions concerning non-local firms entering the country. In Brazil, the home government supports state-owned enterprises with cheap access to capital as is also the case in China. In both EMs, monetary incentives stimulate objectives set by the governments involved (Luo et al., 2010). Brazilian private firms have considerably more freedom in their internationalisation decision-making, because the Brazilian government became more lenient in the course of time. These examples show that EMs have comparable incentives stimulating internationalisation, but are heterogeneous in the execution depending on governmental policies.
Next to comparable incentives, scholars vary in their view on the motivations to internationalise. Luo and Tung (2007) state that EM-MNEs use internationalisation as a “springboard” to develop sophisticated strategic resources to overcome latecomer disadvantages and offset the competition in the domestic market (Luo & Tung, 2007). Other scholars have other views on motivations to internationalise. Dunning (2000) formulates the eclectic paradigm (OLI), which describes various reasons for MNEs to go abroad. “O” is specific to ownership advantage of the firm. “L” is locational attraction, and lastly “I” is related to “alternative ways in which firms may organize the creation and exploitation of their core competences, given the locational attractions of different countries and regions” (Dunning, 2000: 164). The implementation ranges from taking over other firms or closing smaller agreements,
such as joint ventures or the integration of intermediate product markets (Dunning, 2000). Additional reasons to internationalise are capability seeking objectives and commercial goals.
According to Wei, Clegg and Ma (2015) not all firms pursue commercial goals. In certain cases, firms are forced to internationalise because of the institutional environment in which they are active (Wei et al., 2015). This occurs when there is a conflict of interest between firms and government when strategic decisions do not align (Cui & Jiang, 2012). These differences might develop from governmental restrictions on outward FDI or lack of resources caused by governmental interference (Cui & Jiang, 2012). The different views and motivations have evolved over the years and have led to multiple degrees of internationalisation. For example, according to the review by Jormanainen and Koveshnikov (2012), Chinese firms prior to 2001 did not seek strategic assets, but this changed over the years. Before 2001, Chinese firms primarily focused on the domestic market and now focus more on the international market. Another example is seen in the internationalisation motives of Russian firms, which changed over the course of years. In the past Russian multinationals internationalised to arm themselves against domestic competition. In more recent years internationalisation is used to control the complete value chain (Jormanainen & Koveshnikov, 2012).
2.3 Ownership
Different ownership structures have different implications for
internationalisation of EM-MNEs. In fact there are two ownership structures, state-owned enterprises (SOEs) and private-state-owned enterprises (POEs). Cuervo-Cazurra et al. (2014: 925) define SOEs as “legally independent firms with direct ownership by the state that has value-adding activities outside the home country”. Research shows
that there is no one single definition of SOEs as definitions of SOEs vary across countries, depending on the legal forms that apply. The OECD (Organisation for Economic Cooperation and Development) (2015) for instance states, “Any corporate entity recognized by national law as an enterprise in which the state exercise ownership is considered a SOEs”, without including specifications on the degree of ownership. For the purpose of this paper a SOE refers to business entities established by local or central governments whose supervisory officials are from the government where the state has an ownership of 50% or more. In these cases there is no confusion where the responsibility on strategies and policy decisions lie.
The commitment of SOEs and POEs to internationalise differs. As governments primarily focus on the policies to promote increase welfare and social security, the commitment to internationalise will be less for SOEs than for POEs. Yet, the conditions for SOEs to internationalise are favourable, because they benefit from the link with their home governments in the form of access to financial capital and R&D
(resource and development) resources (Buckley, Clegg, Cross, Voss, Rhodes, &
Zheng, 2008; Luo et al., 2010). These benefits result in growth of asset-seeking and competence-creating activities, where firms not only exploit ownership-specific
advantages, but also access new resources in other markets (de Beule, Elia, &
Piscitello, 2014). Yet, there are also restricting factors.
SOEs most often function in under-developed institutional environments with weak market-based mechanisms (Hong et al., 2015). Secondly, as Buckley et al. (2008) point out, EM-MNEs in the broader sense do not possess strong brand names and technological capabilities. By focusing their attention on these negative points and improving their position, firms arm themselves against global competition. SOEs need to internationalise not only to arm themselves but also to reduce the sole
dependency on the home market. As global failures can affect the welfare of inhabitants, reducing dependency by internationalising can ensure protection of public goods (Cuervo-Cazurra et al., 2014) and thus serve social goals. Furthermore, internationalisation of SOEs provides governments with the opportunity to impose their ideology beyond their borders. This means that although SOEs are not primarily driven by commercials goals, fulfilling their political objectives (Amighini et al., 2013) through internationalisation can be beneficial for a nation.
POEs come into being through institutional reforms and economic liberalization in transitional economies. The growth of knowledge, capabilities, and competition of other private firms prompts POEs’ internationalisation process (Cui, Meyer, & Hu, 2014). POEs are exposed to wider competition in the market compared to SOEs. They are aware that to obtain their commercial objectives, change is imperative to strengthen their competitive position, nationally and internationally, by seeking strategic assets abroad (Cui et al., 2014). Contrary to SOEs international strategies of POEs are independent of the institutional environment (Cui & Liang, 2012). However at the same time, both types of EM-MNEs (SOEs and POEs) adopt internationalisation strategies as a springboard to develop resources and reduce the vulnerability resulting from the institutional environment in their home country and arm themselves against global competition (Luo & Tung, 2007). By their independence POEs can play a dominant role in developed economies, while in EMs SOEs dominate due to the strong role of the government (Liang et al., 2012). This difference in pressure from the outside competition distinguishes the internationalisation process of both ownership structures.
2.3.1 State-owned enterprise (SOEs)
The government of an EM endorses internationalisation of SOEs by macro-level policies and firm-level arrangements (Hong et al., 2015). With these policies and arrangements governments set the conditions for SOEs to fulfil political, economic, and social objectives set by the state (Hong et al., 2015), whether or not the decisions are directly economically profitable for the firm (Wei et al., 2015). An example is the “Go-Global” program launched by the Chinese government in 2000. With this program the government on the one hand encourages and supports Chinese firms to internationalise at the same time fulfilling political objectives, such as free trade agreements and increasing access to natural resources (Ramasamy et al., 2012)
As the government encourages internationalisation to integrate the home country in the global market, it influences the propensity and the ability of SOEs to internationalise (Hong et al., 2015). Access to resources and assets as Hong et al. (2015) state enhances the ability to internationalise. Governments providing access positively influence internationalisation of SOEs, unlike POEs, which have to rely on internal resources to support their internationalisation (Hong et al., 2015). Due to this support SOEs are able to incur small losses and take greater risks (Wei et al., 2015). On the other hand, by having to operate in the political environment SOEs face bureaucratic hindrances and political intervention (Luo & Tung, 2007). This can result in less risk-taking decisions and a lower degree of internationalisation.
For instance, due to the lack of national resources at the domestic level, SOEs seek natural resources internationally (Ramasamy et al., 2012). Seeking these resources might not align with the profit-maximisation strategy for the firm, but are aligned with the political objectives of the state (Child & Rodrigues, 2005). Due to the support of the state, SOEs can however also profit from the relationship and
partnerships between host and home governments (G2G), which facilitate their internationalisation (Ramasamy et al., 2012). This is known as the “fostering view” (Sun et al., 2015, in Wan & Hoskisson, 2003). It reflects the facilitating role that the institutional environment has on the internationalisation of SOEs (Sun et al., 2015). On the other hand, political constraints can also hold back internationalisation. SOEs follow strict guidelines, both economic and political, reflected in red tape and bureaucratic hindrances, which hinder internationalisation. In sum, SOEs have advantages and disadvantages from their institutional environment, whereas POEs are more inclined to escape the institutional environment as it provide obstacles in pursuing their commercial goals and fulfil their profit-maximisation strategies (Sun et al., 2015).
2.3.2 Private-owned enterprises (POEs)
Internationalisation of POEs is driven by commercial objectives. This applies both to POEs from the developed world and EMs. However, the playing field of POEs to attain these objectives in EMs differs from the context of POEs in developed countries. In certain EMs (e.g. China) POEs have only recently been allowed to internationalise and pursue commercial goals after the government alleviated political restrictions and started to encourage POEs to expand abroad (Ramasamy et al., 2012). At the same time, as Wei et al. (2015) point out, POEs in EMs that internationalise are confronted with institutional hazards in the domestic context. This is reflected in their limited access to capital and the unbalanced development of industries. Moreover, also discriminatory policies with regard to access to natural resources prove to be a driving force for POEs to internationalise and move away from the domestic context (Wei et al., 2015). As a result POEs seek markets to evade these impediments (Ramasamy et al., 2012).
As Liang et al. (2012) point out other factors affect the decision or even the need to internationalise. One of these is the competitive environment. In the domestic context, POEs compete not only with SOEs, but also with foreign POEs. Scholars agree that for POEs to overcome these challenges, they would need to either develop firm-specific advantages or take strategic actions regarding internationalisation (Liang et al., 2012). Ramasamy et al. (2012) show that one of the strategic decisions for POEs is to follow their state-owned counterparts that invest in developed countries to profit from product and service advantages. Also by following SOEs that invest in political risky countries with large natural resource capacities, POEs develop a head start in competition with foreign competition (Ramasamy et al., 2012). This reflects the benefits of close cooperation with SOEs. Other POEs that are more market seekers, prefer to operate independently and prefer to invest in countries that are closer to home and are political less risky (Ramasamy et al., 2012).
2.4 Scale and scope of internationalisation
Over the years, internationalisation of MNEs remains an important focus in IB research. MNEs are defined as firms that operate beyond their national borders and diversify through economies of scale and scope (Rugman & Verbeke, 2004). Internationalisation of firms is characterised by firms operating across national borders by exporting, importing, employing international staff, attracting foreign capital and controlling resources globally (Aggarwal, Berrill, Hutson, & Kearney, 2011). Yet, internationalisation of MNEs and EM-MNEs differ. MNEs in developed economies internationalise with mature technological knowledge and managerial experience (Lynch & Jin, 2016) in reasonably political stable environments. EM-MNEs are faced with latecomer disadvantages, institutional constraints, weak legal systems and lack of technological knowhow. Faced with these conditions, EM-MNEs
tend to aggressively acquire strategic assets and quickly propel themselves in the global marketplace. Remaining aware however, as Luo and Tung (2007) point out, the need for global experience and organizational learning. This observation is in line with Johanson and Vahlne’s (1977) evolutionary process theory.
Following the evolutionary process theory, or Uppsala model (Johanson & Vahlne, 1977), internationalisation is a gradual development process where multinationals enter foreign markets through stages. Starting with exporting close to home, they incrementally increase high-commitment choices, for instance, from export to Greenfield. The increase in commitment starts close to home and increases to countries that are more cultural diverse or distant. Firms incrementally increase their level of commitment as it learns more about new markets. In more recent research, scholars criticize this model stating that firms in practice remain more regionally active, rather than incrementally becoming active on a global scale (Aggarwal et al., 2011; Ghemawat, 2003; Rugman & Verbeke, 2004). Limiting operations near the home region proves to have a number of advantages particularly from the cost point of view. From a transaction cost economic perspective (Williamson, 1979, 1985), MNEs benefit from market penetration in their home region because of lower transaction cost compared to the transaction cost with global expansion (Ghemawat, 2003). MNEs also tend to economize on transactional costs to prevent inefficiencies, caused by overstretching geographic diversification (Rugman & Verbeke, 2005).
In addition, high liability of foreignness increases the cost of doing business and creates possible difficulties in international expansion. Liability of foreignness is defined as “costs arising from the unfamiliarity of the environment, from cultural, political, and economic differences, and from the need for coordination across
geographic distance, among other factors” (Zaheer, 1995). At the same time Hennart (2011) points out that operating on a global basis provides advantages. By diversifying globally, rather than focusing on one region, the markets in which firms are active are less correlated and risk is spread.
However, as there is no common agreement on strategic added value of region or global orientation of multinationals (Rugman & Verbeke 2004; Osegowitsch and Sammartino 2008). This also affects the measurement of the level of internationalisation. Various scholars investigate (Aggarwal et al., 2011; Cerrato, 2009; Flores & Aguilera, 2007; Oh, 2009; Rugman, Oh, & Lim, 2012) the measurement of internationalisation according to different measurement instruments. This paper measures internationalisation according to the scale and scope of internationalisation. Scale refers to a firm’s multi-nationality, which is defined by the degree of the part of the firm’s activities that are executed outside the home country. The scope of internationalisation represents the regional versus the global diversification of activities. In this study the choice is made to look at the geographic dispersion of sales. To illustrate, when a Brazilian firm has 90% of its total sales in Argentina, the firm has a high scale but a low scope of internationalisation.
To measure the scale of internationalisation various standards apply. Oh (2009) applies two standard measurements for the scale of internationalisation: foreign-sales- to-total- sales (FSTS) and foreign-to-total- assets (FATA). Cerrato (2009) measures scale of internationalisation according to FSTS. The results of the measurements provide an overview of the international orientation of a firm. It shows the percentage of activity a firm has abroad, but does not show where that activity takes place. Other scholars use other measurements, for instance IRATA (home-region assets to-total assets) and IRSTS (home-regional sales over total sales) (Rugman & Oh, 2013), but
these instruments go beyond the scope of this paper. Following Oh (2009), this paper uses the standard measurement of FSTS for the scale of internationalisation.
The purpose to measure scope of internationalisation is to capture the regional versus global orientation of EM-MNEs. Various scholars identify measurement instruments for scope of internationalisation (Banalieva & Dhanaraj, 2013; Flores & Aguilera, 2007; Rugman & Oh, 2013). However, as this paper investigates internationalisation of ownership structures from multiple EMs, their measurement instruments do not provide the proper support for this research. This paper chooses to measure the scope of internationalisation according to global sales over total sale, which provides insight into the global dispersion of sales and is more appropriate for the present research question. Different scholars (Oh, 2009; Osegowitsch & Sammartino, 2008; Rugman & Verbeke, 2004) choose not to use the scope of internationalisation as a measurement instrument. However, Rugman and Brugman (2009) state that discarding the scope of internationalisation displays the level of internationalisation inaccurately. Hence, this paper uses both the scale and scope internationalisation.
According to Aggarwal et al. (2011: 1) “the degree of internationalisation of firm level multi-nationality is a key dimension that spans all theoretical frameworks, levels of empirical analysis and domain of investigation in international business research”. It is difficult to measure the optimal level of internationalisation. Aggarwal et al. (2011) develop a classification scheme, which distinguishes between the defining characteristics of the scale and scope of internationalisation, expressed in terms of depth and breadth. Depth is defined as “the degree of engagement with and exposure to each geographic unit”, which in this paper is linked to the scale of internationalisation. Breadth is defined as “the extent of geographical spread of
operations” (Aggarwal et al., 2011). In this paper breadth is linked to the scope of internationalisation.
2.5 Research gap
Over the years, as the economies of EMs become more internationally orientated, they have become of greater interest to IB research. Despite much research done on the internationalisation of EM-MNEs (Banalieva & Santoro, 2009; Hong et al., 2015; Jormanainen & Koveshnikov, 2012; Luo & Tung, 2007) little research is done on the internationalisation of EM-MNEs in relation to the different ownership structures. Scholars who investigate internationalisation of ownership structures (Amighini et al., 2013; Choudhury & Khanna, 2014; Liang et al., 2012; Ramasamy et al., 2012) generally confine themselves to a single EM. This paper investigates internationalisation of ownership structures by integrating different perspectives of internationalisation of SOEs versus POEs. More specifically, this study looks at the relationship between ownership structures and the scale and scope of internationalisation. The EM-MNEs include all five BRICS. Even though these EMs in themselves are different, they face comparable gaps in their institutional environment, challenges when internationalising, and have comparable internationalisation motives (Luo & Tung, 2007). In addition, this study takes a moderating factor into consideration. Most research on internationalisation focuses on the home or host country environment as a moderating factor (Du & Boateng, 2012;
Stoian, 2013; Sun, Peng, Lee, & Tan, 2015; Wei et al., 2015). This paper investigates
whether an internal firm factor, R&D investment, moderates the relationship between EM-MNEs’ ownership structures and their scale and scope of internationalisation.
3. Theoretical framework
3.1 Ownership and scale of internationalisation
SOEs and POEs differ in their internationalisation patterns, particularly in relation to their national political and economic agenda. Whereas POEs have relatively more freedom to develop their own internationalisation strategies, SOEs are restricted by the ideas and ideologies of their respective governments (Hong et al., 2015). The policies and ideologies of a government can have a positive or negative effect on the internationalisation of SOEs. On the one hand, government’s ideas and ideologies can hinder their international growth. SOEs’ internationalisation strategies are not necessarily primarily designed in the interest of the firm in the pursuit of profit, but follow the policy priorities of the government (Wei et al., 2015). As a result, SOEs are subjected to red tape and political intervention (Luo & Tung, 2007). The main objective of governments is to fulfil societal needs and to create jobs rather than accommodating commercial targets. It leads to less risk taking and freedom in investment-related strategies compared to the strategies POEs can implement. Furthermore, in many cases politicians are inclined to resent the idea of contributing to activities across borders instead of activities in the home country. Other restrictions are restraints instigated by other country’s governments, like restrictions on inward FDI to protect the domestic market. Protective policies to secure national interests can prove to be an obstacle for the international growth of SOEs (Cui & Jiang, 2012).
On the other hand, governmental support can be beneficial in various ways. Where governments seek to increase collaboration between countries, governments (home and foreign) can have a positive effect on the internationalisation of SOEs. By establishing a link between governmental objectives and internationalisation, SOEs catch up with counterparts from the West (Luo & Tung, 2007). This link creates
opportunities to increase international activity and access to capital. Furthermore, by complying with governmental objectives, it increases the willingness of governments to share responsibility to endure small losses and ensure the continuity of SOEs (Wei et al., 2015).
In sum, government’s main objective is to create jobs and secure social welfare within the home country. Allocating large amount of resources to international activity abroad can strain its political objectives and create conflicts with stakeholders as well as with the population. At the same time, governmental support can benefit the internationalisation of SOEs and attain national political aims. The assumption is that POEs, on the other hand, function more effectively in an international market, as they need to take less heed of national policy objectives and institutional limitations. It raises the question how SOEs versus POEs relate to their scale of internationalisation. Hence:
H1a: State versus private ownership is positively related to a firm’s scale of internationalization for companies based in BRICS-countries.
H1b: State versus private ownership is negatively related to a firm’s scale of internationalization for companies based in BRICS-countries.
3.2 Ownership and scope of internationalisation
This paper examines the relationship between ownership and their scale and scope of internationalisation. Looking at the scope of internationalisation, the paper captures the regional versus global orientation of EM-MNEs by their geographic dispersion of sales. Rugman and Verbeke (2004) in their study on the perspective of regional and global strategies of MNEs draw a number of conclusions, of which two
are particularly interesting here. Out of the 500 MNEs covered by their research, only nine in their view are considered truly global. They base their findings on the percentages of sales in particular regions and create a classification scheme. A firm is considered global when it has a least 20% of sales in each region in the triad (North America, Japan and Europe), but not more than 50% of sales in any region. They find that 80% of the MNEs are home region oriented, because they have over 50% of sales in their home region. Therefore, Rugman and Verbeke (2004) argue that IB research should have a regional rather than global focus. Osegowitsch and Sammartino (2008) retest the data of Rugman and Verbeke (2004) and show by their findings that firms have a higher percentage of sales outside the home region than the percentage Rugman and Verbeke (2004) present. They point out that technological changes, such as the Internet as well as economic and political changes are important drivers. This supports the notion that research on globalization should have a global focus.
Moreover, Rugman and Verbeke (2004) argue that the limited global market success is due to the fact that firms are limited in their international transferability of firm specific advantages (FSAs) beyond the home region. FSAs are defined as: “unique propriety to the organisation” (Collison & Rugman, 2008: 288). They are a set of factors for each firm, which determine a firms’ competitive advantage (Cerrato, 2009). Examples of FSAs are size, marketing knowledge, or technological capabilities. When transferring FSAs outside the home region, firms must take various factors, such as cultural distance, competitors and inter-regional foreignness into consideration. As markets are continuously changing, firms must keep up with consumers taste and technological change by building FSAs throughout the organisation to create a strong competitive position (Rugman et al., 2012).
Comparing the ease of building and transferring FSAs to overcome liabilities appears to be more difficult for SOEs than POEs. POEs are able to focus on the development and transfer of their FSAs. SOEs must also take account political
objectives of their governments into account (Cuervo-Cazurra et al., 2014).
Furthermore, as government’s main priority is to provide social welfare at a national level, enjoying a large amount of activity outside the home region does not align with this priority. Therefore, this paper states that SOES versus POEs is negatively related to the scope of internationalisation as SOEs have more difficulty achieving larger scope of internationalisation than POEs due the complications of building and the transfer of FSAs. Hence:
H2: State versus private ownership is negatively related to a firm’s scope of internationalization for companies based in BRICS-countries.
3.3 R&D investment
The relationship between ownership structures and scale and scope of internationalisation can be moderated by various factors. Examples of moderating factors are the institutional environment, firm size, product technology, or investments made to transfer knowledge to and from abroad (Banalieva & Dhanaraj, 2013; Cerrato, 2009). To ensure a positive relationship between ownership and internationalisation, FSAs can moderate this relationship. By seeking knowledge,
(inter) national firms increase the strength of these FSAs (Chen, Li, & Shapiro, 2012).
FSAs are bolstered when headquarters are considered a central hub from which this
knowledge flows to the network of subsidiaries (Awate, Larsen, & Mudambi, 2015).
The subsidiaries exploit the FSAs to further strengthen the firm’s position. Accumulating and transferring FSAs throughout firm’s extended network can
increase the competitive advantages (Awate et al., 2015). Rugman and Verbeke (2004) and Cerrato (2009) argue that FSAs are best exploited in the home region, pointing to the complexities arising from the liabilities of foreignness.
To overcome liability of foreignness, firms must leverage non-location bound FSAs relevant for that location. An example of a non-location bound FSA is R&D investment. R&D investment is defined as “proprietary knowledge developed by the firm, integrated within firms’ processes” (Banalieva & Dhanaraj, 2013). R&D investment is a driver not only in regional internationalisation, but also exploited in the case of global orientation (Cerrato, 2009). It should be noted that the ease with which the transfer of FSAs takes place varies across industries. This is the case for instance in technologically intensive industries where FSAs are under greater pressure to innovate than is the case in industries where the pressure to innovate is lower (Cerrato, 2009).
Comparing EM-MNEs with firms from developed countries, Awate et al. (2015) postulate that in EM-MNEs the level of R&D is higher in subsidiaries than at headquarters. This leads to a reverse knowledge flow from the subsidiary to the headquarters. This is particularly true when subsidiaries are located in developed economies. In the case of EM-MNEs transferring knowledge from subsidiaries back to the headquarters, this non-location bound FSA (R&D investment) flows through the organisation accelerating the catch-up process (Awate et al., 2015). Thus, R&D creates the contingency for EM-MNEs to catch-up with their Western counterparts and allows them to better arm them against global competition and strengthen their position in the global marketplace. This implies that R&D investment has a positive moderating effect on the relationship between SOEs versus POEs and their scale and scope of internationalisation. Mover, much R&D knowledge is tacit in nature (i.e.
difficult to codify and transfer) and being present in the host country allows R&D knowhow to flow from host locations through the organisation (Chen et al., 2012), increasing SOEs’ competitive position, efficiency and effectiveness. Banalieva and Dhanaraj (2013) note in their research that R&D investment increase firms’ ability to compete in the global marketplace, which also can positively moderate the stated relationships between ownership structures and scale and scope of internationalisation. Hence:
H3: R&D investment positively moderates the relationships hypothesized in H1 and H2
The hypotheses are presented in the conceptual model in Figure 1. Figure 1.
The next section describes this paper’s method, which includes the sources of the dataset, the collection process and the regression analysis.
4. Methods
4.1 Sample and data collection
This paper uses a cross-sectional research design to examine internationalisation of SOEs versus POEs from BRICS-countries. In general all firms in the sample are multinationals that produce products and deliver services across national borders. The sample is based on the 100 largest companies from each of the BRICS countries. The sample stems from two sources. One source are the 2014 annual reports from the 100 largest companies from each of the BRICS. These are found by the means of online search engines, on stock exchange websites and companies’ websites. The other source is ORBIS. ORBIS is an online database built by Bureau van Dijk, an expert on company information and business intelligence. Their database provides information on ownership structure, shareholders and subsidiaries’ locations (De Jong & Van Houten, 2014) and publishes financial information of millions of firms over different industries.
Following ORBIS, the sample selects firms on the basis of the highest to the lowest turnover. If firms’ information in ORBIS dates ante 2013, the firm is not included. Information from firms’ 2014 annual reports complements these data. When reports of 2014 are not available, the information in annual reports of 2013 is
included. In both cases, only annual reports written in English are considered. This extensive dataset provides information on ownership structures, firms’ expenses including R&D investment, and the spread of region and global sales. The total dataset comprises 500 firms. The sample that investigates the relationship between ownership structures and scale of internationalisation comprise 168 firms. The sample to investigate the relationship between ownership structures and scope of
4.2 Measures
The selection of the largest firms offers a spectrum to analyse degrees of EM-MNEs internationalisation on the basis of sales. Scale and scope are measured according to foreign sales over total sales and global sales over total sales. Foreign and global sales cover six regions: Africa, Asia, Europe, North and Central America, Oceania and South-America. The method chosen comprises more areas of sales than focusing on sales in the triad (America, Europe and Japan), therefore providing more information on the relationship between ownership structures and their scale and scope of internationalisation. The next section describes the variables. The
descriptions of the dependent and the independent variables come first, followed by the description of the moderating and the control variables.
4.2.1 Dependent variable
The dependent variables in this paper are the scale and scope of internationalisation. To measure the scale of internationalisation, the ratio of foreign sales to total sales is chosen. Following research in this field (Cerrato, 2009; Oh, 2009; Rugman & Oh, 2011), the ratio of foreign sales to total sales measure scale of internationalisation. Measuring scale, Oh (2009) applies two standard measurements of internationalisation: foreign-sales-to-total-sales (FSTS) and foreign-to-total-assets (FATA). These measurement instruments help provide an overview of the international orientation of a firm. As mentioned above, FSTS shows the percentage of the activity a firm has abroad, but does not show where that activity takes place. Other measurement instruments, such as FATA, are not used, as the focus here is sales on and not on assets. Therefore, in line with Oh (2009) and Rugman and Oh (2011) this paper uses FSTS, as an appropriate measurement instrument for the scale of internationalisation.
To measure scope, this study looks at the division of global sales over total sales to explain the global versus the regional activity of firms. Scope refers to the diversification of international activities. As noted earlier, scale is the most common measurement instrument in IB research. Researchers apply scope less as a measurement instrument. Yet, scope offers valuable insight for IB research as it also shows to what extent firms are active globally.
4.2.2 Independent variable
The independent variable is ownership structures with a distinction between SOEs and POEs. For the purpose of this study, SOEs are firms in which the government has a stake of more than 50%. This paper uses a dummy variable to indicate what type of ownership belongs to which firms: coded as a “1” for state-owned enterprises and coded as a “0” for private-state-owned enterprises.
4.2.3 Moderator
This paper states that the relationship between ownership structures and internationalisation is positively moderated by R&D investment. Looking at technological FSAs, Cerrato (2009) present an interesting case of FSAs that are non-location bound and are therefore easily transferable across borders. This paper follows his findings and investigates the moderating effect of a technological FSA, R&D investment, on the relationship between ownership structures and their scale and scope of internationalisation. R&D investment is chosen as a variable to measure if, as an internal firm factor, it has a significant moderating effect on the stated
relationship. Following Banalieve and Dhanaraj (2013) and Benito-Osorio, Colino,
Guerras-Martín and Zúñiga-Vicente (2016), R&D investment is measured as a percentage of R&D investment over total sales.
4.2.4 Control variables
In this paper the relationship between ownership and scale and scope of internationalisation is controlled by three different variables. The first control variable is firm size. Large firms generally have more tangible and intangible resources, alongside financial strength, which creates favourable conditions for internationalisation. To determine the size of the firm a logarithm of the total numbers of employees is used.
The second control variable is firm’s age. Mature firms have had more time to develop and build strong FSAs, creating a firm basis for internationalisation in both SOEs and POEs. However, as Luo and Tung (2007) show, this is also the case with some relatively young EM-MNEs, that propel themselves quickly into the global marketplace. This paper measures firm’s age according to the difference between the founding year of the firm and the year of the selected annual report (2014 or 2013).
The last control variable is firm’s turnover. Turnover indicates the total sales of the firm. Higher sales increase financial strength, which could indicate a higher level
of internationalisation (Holtbrügge & Kreppel 2012). Again, for EM-MNEs,
especially for SOEs, this might not apply as they can show a high turnover while being predominately active within the home country/region. To determine the turnover of firms, the logarithm of total turnover in US millions dollars is used.
4.3 Statistical Analysis and results
Table 1 presents the descriptive statistics of the dependent, independent, moderating, and control variables. Table 1 illustrates there is a high correlation between the dependent variables scale and scope. If correlation between variables is larger than 0.7, multicollinearity exist. This implies that scale or scope linearly predicts the other variable with a considerable degree of accuracy (Field, 2009).
However, in this paper, scale and scope are analysed separately in different models, giving no complications. In all other variables no multicollinearity is reported.
The sample consists of firms that are on average 37 years old and employ 43997 employees. The average turnover is 12,752.80 US million dollars. The average spending on R&D investment is 226,82 US million dollars. Looking at scale and scope of internationalisation, scale is measured according to FSTS, while scope is measured according to global sales over total sales. Scale of internationalisation is measured by FSTS from information of 168 firms. The average FSTS is 0.329, indicating that from all firms 32,9% of sales is not in the home country. Data on scope are retrieved from 89 firms and measured by global sales to indicate the geographical dispersion of sales. The average scope of internationalisation is 0.401. This indicates that 40% of sales of a BRICS EM-MNE does not take place in the home region.
Table 1
This paper uses a hierarchical regression analysis to test if the scale and scope of internationalisation is related to state versus private-ownership. To test for the impact of R&D investment (moderating variable) on the relationship between
ownership and internationalisation, an interaction term is used by computing the product between state-ownership and R&D investment. The first step in the hierarchical regression is the introduction of the control variables to test for the effect of the control variables on the dependent variable. Next, the independent variable and the interaction terms are added to the model. Analysing one step at a time, the explanatory power per added variable is analysed. Accordingly, the analysis consists of four models for both scale and scope of internationalisation. The first model solely runs the control variables (firm’s turnover, age and size). Model 2a tests both hypotheses 1a and 1b. Model 2b tests Hypothesis 2. Model 3a and 3b include the moderating variable. Model 4a and 4b illustrate the moderating effect on the relationship between state-ownership and scale and scope of internationalisation testing hypothesis 3.
Hypothesis 1 is tested in model 2a using a hierarchical regression with scale of internationalisation as the dependent variable and state-ownership as independent variable. Hypothesis 1a postulates that state-ownership is positively related to scale of internationalisation. Hypothesis 1b states the opposite, i.e. that state-ownership is negatively related to the scale of internationalisation. Model 2a illustrates that the negative coefficient is statistically significant (B=-0.473, p=0.009). Therefore, hypothesis 1b is supported and hypothesis 1a is rejected. The adjusted R² in model 2a is 0.109. This means that model 2a explains 10.9% of variance of the data. Hypothesis 2 postulates that state-ownership versus private-ownership is negatively related to the scope of internationalisation. Model 2b indicates that state-ownership is negatively related to the scope of internationalisation. However, the relationship is insignificant (B=0.077, p= 0.733), thereby rejecting hypothesis 2. The adjusted R² in model 2b is -14.8%. This means that model 2b is not able to explain the variance in the data in an
accurate way. Model 3a indicates a positive relationship between R&D investment and the scale of internationalisation (B=0.197, p=0.137); however, the contribution of this variable is insignificant. Model 3b indicates a negative relationship between R&D investment and the scope of internationalisation, but is also not statistically significant (B=-0.078, p= 0.735).
Hypothesis 3 states that R&D investment positively moderates the relationship between state-ownership and the scale and scope of internationalisation. The product of state-ownership and R&D investment computes the interaction effect. Model 4a and 4b analyses whether the relationship between state-ownership and the scale and scope of internationalisation is affected by R&D investment. The result in model 4a shows that the interaction between R&D investment and state-ownership is not significant (B=-0.253, p=0.164), suggesting that R&D investment does not affect the relationship between state-ownership and scale of internationalisation. Model 4b shows that the interaction effect between R&D investment and state-ownership is also not significant (B=-1.466, p=0.332), suggesting that R&D investment also does not affect the relationship between state-ownership and the scope of internationalisation. Hence hypothesis 3 is rejected.
As for the control variables, no support is found for firms’ turnover, age or number of employees suggesting that these aspects do not influence EM-MNEs’ scale and scope of internationalisation.
Table 2
5. Discussion
The empirical findings and results of this paper shed light on the relationship between SOEs versus POEs from BRICS countries and their scale and scope of internationalisation. Most current research focuses on internationalisation of EM-MNEs in general and does not necessarily distinguish between internationalisation of ownership structures in EM-MNEs. Scholars who do investigate internationalisation of different ownership structures generally confine themselves to one EM. This paper focuses on the internationalisation of ownership structures - SOEs versus POEs - in EMs, of the five BRICS countries, measured according to their scale and scope. More specifically, this paper provides insight into the relationship between ownership and the scale and scope of internationalisation moderated by R&D investment.
The main results show that state-ownership is negatively related to the scale of internationalisation. As far as the scope of internationalisation is concerned, looking at region versus global focus, the results do not provide support for a significant relationship between SOEs versus POEs and their scope. Using R&D investment as a moderator, no significant moderating effect is found. This means that the measured level of R&D investment in this study does not have a significant effect on the relationship between state-ownership and the scale and scope of internationalisation of EM-MNEs.
In the next sections, the academic relevance, managerial implications, limitations and suggestions for future research are discussed.
5.1 Academic relevance
The aim of this paper is to address a gap in IB literature by investigating the relationship between state versus private-ownership and internationalisation of
EM-
MNEs moderated by R&D investment. As expected, state-ownership of EM-MNEs is negatively related to the scale of internationalisation. This confirms the observation that SOEs from BRICS countries focus on sales inside the country and put less emphasis on sales across borders. It reflects the SOEs’ priority to comply with national policies geared to fulfilling societal needs and job creation.
As stated earlier, a similar expectation holds for the relationship between state-ownership and the scope of internationalisation. IB research shows that SOEs are domestically oriented to satisfy the need for job creation and achieve political objectives (Cuervo-Cazurrra et al., 2014). Research also shows that the scope of internationalisation increases cost and especially complexity, largely due to the difficulty of building and transferring FSAs across borders (Rugman et al., 2012). This is especially the case for SOEs compared to POEs, since SOEs not only have to focus on building FSAs related to the firm, but also have to build FSAs to obtain political objectives. It is interesting to note that the results provide no evidence for a negative relationship between state-ownership and the scope of internationalisation. Yet, it is noteworthy, that SOEs are trading commodities and raw materials to serve national political objectives broadening their scope of internationalisation in the process. One example is the increasing investments rate of BRICS countries into Africa, where SOEs, especially from China, increase investment in trading goods (The Economist, 2015).
Finally, using R&D investment as a moderator does not affect the relationship between state-ownership and their scale and scope of internationalisation. There is no significant evidence to support this hypothesis when measured according to the instruments used.
5.2 Managerial implications
Considering the results from the statistical regression, the following managerial implications come to the fore.
First, when firms from EMs are state-owned, they are negatively related to the scale of internationalisation due to governmental control, reflecting in institutional barriers and national social welfare policies. The government does not prioritise economic objectives for SOEs, due to its focus on political objectives within the country and not across borders. It is a challenge for managers of SOEs to find a good balance between attaining the political objectives and profit from the increasing opportunities of internationalisation.
Secondly, some EM-MNEs propel themselves quickly into the global marketplace by risk-taking decision-making to catch up with their Western counterparts (Luo & Tung, 2007). R&D investment might play a important role in this decision. However, on the basis of the investigation carried out in this paper, no conclusions can be drawn, because the moderating effect proves to have no significant effect on the relationship between ownership and the scale and scope of internationalisation. A possible reason for this may lie in the fact that the data available on R&D investment are rather limited and the size of the sample is small. Apart from that, the information that is available on R&D investment shows that the level of R&D investment is also relatively low.
5.3 Limitations and suggestions for future research
This study has a number of limitations that need be acknowledged. First, the data collected from firm’s annual reports and ORBIS stem from 2014. It is possible that during the economic recession, which began in 2008, EM-MNEs concentrated explicitly on business development within the country rather than internationalising in
the need to recover from the economic backlash. This study uses a cross-sectional dimension. Future research should involve the longitudinal dimension. It would provide more insight on the impact of economic drawbacks on the relationship between SOEs versus POEs and the scale and scope of internationalisation, and provide insight into the effect of economic drawbacks on internationalisation of EM-MNEs.
Another line of research would be to investigate how the growth of the number of trading partners, such as those from African continent, influences the regional versus the global focus of SOEs. This might provide a better understanding of the relationship between SOEs versus POEs and their scope of internationalisation.
Another factor that plays a role is that no effect of the moderating variable appears on the hypothesized relationship. By adding multiple moderating effects, such as the institutional environment or corporate governance structures, a more comprehensive conclusion may be drawn. Adding multiple moderating variables not only on firm level, but also on country level could shed more light on the investigated relationship.
Finally, this paper focuses only on the largest EM-MNEs from the BRICS. The findings cannot draw any conclusions regarding middle or small-sized EM-MNEs. It would be an interesting contribution to future research to investigate the scale and scope of internationalisation from small and middle-sized EM-MNEs.
6. Conclusion
As internationalisation of EM-MNEs expand their presence in the global market place, IB research on their internationalisation grows extensively (Hong et al., 2015; Jormanainen & Koveshnikov, 2012; Luo & Tung, 2007). However, there are only a few studies that investigate internationalisation of EM-MNEs with a focus on the
distinction between the different ownership structures in EM-MNEs. Besides, IB research that does investigate internationalisation of different ownership structures generally (Amighini et al., 2013; Liang et al., 2012; Ramasamy et al., 2012) confines itself to one EM. As Cuervo-Cazurra et al. (2014) point out internationalisation motives of SOEs and POEs differ. SOEs’ main priority is to attain political objectives, whereas POEs are driven by commercial goals. This paper has investigated the relationship between internationalisation of SOEs versus POEs and their internationalisation from the five BRICS countries measuring internationalisation
according to their scale and scope of internationalisation. Scale measures a firms’
multi-nationality, defined by the degree of what part of the firm’s activities are executed outside the home country, which in this paper is measured by foreign sales
over sales. Scope measures firms’ region versus global focus, measured by global
sales over total sales. The relationship is moderated by R&D investment, to study if an internal firm characteristic moderates the relationship between ownership and internationalisation.
The dataset used the 100 largest firms of each of the BRICS country based on EM-MNEs’ turnover. The data were collecting by assessing information from the database ORBIS and firms’ annual report of 2014.
The results from the multiple regression analysis show that SOEs versus POEs are negatively related to the scale of internationalisation. This finding is in line with the existing literature, which shows that political objectives and institutional barriers strongly condition SOEs’ internationalisation, whereas POEs have differ different objectives and are driven by commercial goals. Using R&D investment as a moderator, no significant effect appears on the relationship between ownership structures and their internationalisation. Future research could concentrate on the
longitudinal dimension by measuring internationalisation of EM-MNEs over multiple years. An addition could be to include firm level and country level characteristics that moderate the relationship between ownership and the scale and scope of internationalisation from EM-MNEs.
Acknowledgement
It is of great pleasure to express my gratitude for my supervisor dr. Niccolò Pisani, assistant professor of International Management at the Faculty of Economics and Business, University of Amsterdam. Throughout the process, his supervision, valuable feedback and comments enabled me to complete my thesis. I would also like to thank my mother, Marianne, for the incredible and unconditional support she gave me in the last weeks of the completion of my thesis.
