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A general theory of springboard MNEs
Article in Journal of International Business Studies · February 2018
DOI: 10.1057/s41267-017-0114-8
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Journal of International Business Studies (2018) 49, 129–152
ª 2017 Academy of International Business All rights reserved 0047-2506/18
www.jibs.net
PERSPECTIVE
A general theory of springboard MNEs
Yadong Luo1 and
Rosalie L Tung2
1
School of Business Administration, University of
Miami, Coral Gables, FL 33124-9145, USA;
2
Beedie School of Business, Simon Fraser
University, Burnaby, BC, Canada
Correspondence:
Y Luo, School of Business Administration,
University of Miami, Coral Gables,
FL 33124-9145, USA
e-mail: yadong@miami.edu
Abstract
The springboard view has become one theoretic lens to analyze emerging
market multinationals (EMNEs) in the past decade. A decade after its first
introduction in 2007, new developments offer keen insights on these firms and
MNEs in general that aggressively engage in critical asset-seeking. We compare
this view with other IB theories, highlighting their differences as well as
complementarity. We articulate unique strengths and weaknesses of EMNEs,
including their vulnerability and complexity caused in part by home country
institutions. We discuss amalgamation, ambidexterity, and adaptation
advantages that differentiate springboard MNEs from more established
advanced country MNEs, and explain why and how springboard acts should
be analyzed along with global competitiveness augmentation. We introduce an
upward spiral concept to advance our understanding of linkages between
springboard and post-springboard activities, and explain some critical crosscultural and human resource management issues in the process. To help
continued research on springboard MNEs, we highlight macro- and micromanagement issues that are particularly worth exploring.
Journal of International Business Studies (2018) 49, 129–152.
https://doi.org/10.1057/s41267-017-0114-8
Keywords: springboard perspective; EMNEs; strategic behavior; emerging markets
Received: 30 August 2017
Accepted: 1 September 2017
Online publication date: 11 October 2017
INTRODUCTION
We revisit the springboard perspective for fourfold reasons: First, as
emerging market MNEs, a focus of our original springboard
perspective (Luo & Tung, 2007), continue to grow in numbers,
size, and importance in the global economy, they face many new
challenges. Our understanding of their unique ownership- or firmspecific advantages and disadvantages as well as their peculiar
strategic behavior remains inadequate. Second, there are many new
insights, questions, and issues that have arisen after the springboard view was introduced a decade ago. We are grateful that the
view has been impactful but humbled too that additional insights
and advancement are needed to reflect the changes in the global
economy to capture more adequately the complexity, heterogeneity, and vulnerability of these firms. Third, it has been intellectually
phenomenal to see the swift and substantial growth of research on
such MNEs, including quantitative and qualitative studies over the
past decade. Still, we feel that there is ample room in the field to
enrich theorization of what is unique about these MNEs and how
the springboard perspective is different from yet complementary
with other IB theories. Fourth, the perspective can be applied to
A general theory of springboard MNEs
Yadong Luo and Rosalie L Tung
130
MNEs in general to the extent that these firms
aggressively seek strategic assets from the outset of
outward FDI (OFDI) to augment their home capabilities and use their strengthened capabilities and
improved home base to better compete globally.
We thus use two terms of MNEs in this article –
EMNEs referring specifically to emerging market
MNEs, and springboard MNEs (SMNEs, hereafter)
referring broadly to MNEs that expand through
springboarding. EMNEs, still a central focus of this
article, are the premier subset of SMNEs.
The growth of MNEs, springboard firms included,
is significantly affected by geopolitical and economic conditions at home and abroad. Factors such
as the weakening demand and declining commodity prices, accompanied by depreciating home
country currencies, have recently affected the
internationalization of MNEs (UNCTAD, 2016).
Still, EMNEs have fundamentally changed OFDI
and MNE landscapes, and are in the process of
reshaping the world economy. Over 120 emerging
economies have engaged in OFDI, and there are
now more than 30,000 MNEs headquartered in
these economies (Chaisse, 2017). OFDI by emerging market firms rose from approximately US$1
billion during 1980–1985 to US$409 billion in
2015. Six of the top twenty home economies were
emerging markets in 2015. China, for example,
remains the largest OFDI country among all emerging markets, and the second largest among all
home economies in 2015 (Chaisse, 2017). Figure 1
shows the number of EMNEs in Fortune Global 500
from 1995 to 2017, increasing from 69 (41 from
BRIC) in 2007, when the springboard view was
introduced, to 164 from all emerging economies
(134 from BRIC).
EMNEs have also changed the IB research landscape. As Figure 2 shows, there has been steady and
remarkable growth in EMNE research since 1990,
growing more notably since 2007. The number of
articles published in major IB and management
journals1 has also more than doubled from 2007 to
2016. The springboard view has been one of the top
four theories used to study EMNEs,2 along with
institution theory (including institution-based
view), resource-based view (including dynamic
capability), and OLI paradigm (see review by Luo
& Zhang, 2016). Other notable theories previously
used include organizational learning, social capital,
resource dependence, transaction cost economics,
network/alliance, and internationalization process.
International springboard is a global strategy to
improve a firm’s global competitiveness and catch
up with established and powerful rivals in a
relatively rapid fashion through aggressive strategic
asset- and opportunity-seeking, and by benefitting
from favorable institutions in foreign countries. By
pinpointing such distinctive motives and prescribing unique international growth trajectories, the
springboard view offers a succinct case for new
theoretical advancements in the theory of MNE in
general, and has emerged as a rich foundation to
analyze the unique parameters of EMNEs in particular. The central premise of the springboard view is
that these firms use international expansion as a
springboard to (1) acquire strategic resources to
Figure 1 Number of emerging market MNEs in Fortune Global 500, 1995–2017. (Color figure online)
Journal of International Business Studies
A general theory of springboard MNEs
Yadong Luo and Rosalie L Tung
131
45
41
40
35
30
30
25
23
20
20
15
12
10
5
0
18
0
0
0
1
1
1
1
3
0
1
2
1
3
0
0
1
20
25
20
10
3
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
Figure 2 Articles on EMNEs in major IB journals (1990–2016).
compensate for their capability voids, (2) overcome
laggard disadvantages, (3) exploit competitive
advantages and market opportunities in other
countries, (4) alleviate institutional and market
constraints at home and bypass trade barriers into
advanced markets, and (5) better compete with
global rivals with augmented capabilities and
improved home base after strategic asset acquisition (Luo & Tung, 2007). These yardsticks may
apply too to some advanced country MNEs that
share strategic asset-seeking motive, home base’s
central role, and environmental constraints at
home. Surely, country of origin matters, and complete homogeneity between MNEs from different
economies does not exist. Among EMNEs, not
every firm would necessarily assign the same
weight to each of the above goals, and each OFDI
project may emphasize different goals. However,
there is a pattern of strategic intent behind the
firms’ overarching globalization that involves these
goals that can be accomplished through the springboard act. That is, they systematically and recursively use international expansion to better equip
themselves to compete against global rivals, reduce
vulnerability to home institutions, and fortify their
home base to further catapult, domestically and
internationally.
The springboard view remains important. First,
despite growing counter-globalization trends in
some countries that undoubtedly inject uncertainty into the future of globalization, it is difficult
to envisage a future where SMNEs will retrench
from their international expansion activities. While
the US may be turning its focus inward, most other
countries are not. Second, evidence reinforces the
logic that many SMNEs’ recent acquisitions are
designed to repatriate high-end, world-class technology, advance their R&D skills, bolster their
innovation, upgrade their capabilities, and augment their ownership of technology (Forbes, 2016).
Even some advanced economy SMNEs share similar
strategic pursuits, acquiring critical assets from
other advanced economies and even from emerging economies to bolster their home country
capability portfolio, a pattern highlighted as knowledge-seeking OFDI (UNCTAD, 2017: 27–29). Third,
emerging economies will play a bigger role in
shaping global norms and institutions that underpin the world economy. The fact that the Trump
administration is no longer committed, or does
less, to uphold the global economic order may
make room more quickly for some leading emerging economies to assume this mantle. The BRIC
countries that have benefitted immensely from the
open global economy appear eager to fill the new
void in global economic governance. EMNEs will
serve as a key player in this pursuit.
We need new insights that can further the
springboard view. The springboard view needs both
broader and narrower contextualization – broader
in the sense that SMNEs are not limited only to
EMNEs or developing country MNEs in general but
can apply to some newly industrialized country
MNEs (e.g., new MNEs from South Korea, Israel,
Taiwan, or Singapore) and advanced country MNEs
(AMNEs, hereafter),3 and narrower in the sense that
Journal of International Business Studies
A general theory of springboard MNEs
Yadong Luo and Rosalie L Tung
132
not every EMNE act in a springboard fashion. As
noted in our original article (2007) and reported by
UNCTAD (2017), EMNEs follow a dual path, investing in developed (more on strategic asset-seeking)
and developing (more on market-seeking or natural
resource-seeking, which involves less a springboard
act) economies. We need nuanced understanding
of challenges that confront SMNEs in the form of
organizational complexity – within group variance
and heterogeneity, different institutional and market conditions at home, susceptibility to regulatory
requirements at home and abroad, evolutionary
changes of these firms, and various types of
organizations.
Although our original piece presented the internal and external forces that stimulate EMNEs to
spring, the article did not delineate in detail the
competitive strengths and weaknesses that characterize these firms in comparison with AMNEs. In
the present article, we will discuss this to enable us
to better grasp the ownership advantages and
disadvantages of EMNEs. We will also speculate
on how these firms continue their growth ex post
springboard. To this end, we will later introduce an
upward spiral concept – that is, they begin with
inward internationalization, then aggressively conduct OFDI, transfer strategic assets to home, accentuate home-centered capability upgrading, and
successively re-catapult globally with stronger capabilities. We will tackle some of these issues within
the springboard context, including our suggestions
for future research to address them.
THEORETICAL INSIGHTS
OF THE SPRINGBOARD PERSPECTIVE
We suggested (Luo & Tung, 2007) that EMNEs
systematically and recursively use international
expansion as a springboard to achieve two central
objectives – acquire critical resources needed to
compete more effectively against their global rivals
at home and abroad and to reduce their vulnerability to institutional and market constraints at
home, among other motives. These efforts are
systematic in the sense that springboard steps are
deliberately designed as a grand plan and a longrange strategy to establish more solidly their competitive positions in global marketplace. They are
recursive in the sense that such springboard activities are recurrent (e.g., a series of OFDI activities
over a period of time with each investment leveraging different strategic assets they acquire or
focusing on different strategic intent such as
Journal of International Business Studies
market opportunity-seeking) and revolving (i.e.,
outward activities are strongly integrated with
activities back home). Elucidated previously were
also the reasons and forces that prompt EMNEs to
spring, unique strategic behaviors that manifest the
springboard act, fundamental challenges involving
the act, as well as a typology that captures the
variance of EMNEs along ownership types and
global diversification.
The paradigm was labeled ‘‘springboard’’ for two
reasons. One, the firms’ overwhelming goal is to
use international expansion to augment their
capabilities and competence portfolio so as to
further take off to a new height in global competition. This endeavor is intended to help them,
after capability catchup, to leapfrog from their
global newcomer or latecomer status and to spring
further along in global competition. International
expansion provides a better and faster alternative to
consummate their capability portfolio than other
choices. Acquired strategic assets such as technology, brands, and global consumer base complement their mass manufacturing skills and cost
effectiveness, resulting in additional synergies for
them. International expansion, not domestic
expansion, functions as a take-off and flexible
board, endowing them with great opportunities in
acquiring critical assets they need (often via M&As
in advanced economies) and appropriating market
opportunities. The ‘‘springboard’’ is flexible in a
sense that these MNEs benefit from multiple gains
and options, depending on their original intent
and destined host countries, ranging from institutional arbitrage and barriers bypassing to capability
acquisition and market extension. Underlying such
intentions is to make them competitively sturdy on
the global stage. This flexibility is in part attributed
to new global landscapes such as the availability of
global open resources and increased M&A opportunities, willingness of AMNEs to share, sell or spin
off their key assets, technological changes and
advancement, and global connectivity and
integration.
The second reason behind the label is that
international expansion supplies EMNEs with not
only opportunities and capability augmentation
(hard skills) but also global visions, views, insights,
and experience (soft skills) needed in international
competition. They cannot leap, jump, and spring in
global competition if they stayed home. Recent
studies confirm that successful EMNEs tend to
maintain strong entrepreneurial leadership (Cui,
Meyer, & Hu, 2014; Rui & Yip, 2008; Yiu, Lau, &
A general theory of springboard MNEs
Yadong Luo and Rosalie L Tung
133
Bruton, 2007; Zhou, Barnes, & Lu, 2010) and that
internationalization brings in global visions for
both foreign subsidiaries and parent firms, and such
visions buttress business growth at home and
abroad (Al-Aali & Teece, 2014; Brouthers, Nakos,
& Dimitratos, 2015; Wang et al., 2014; Zhou et al.,
2010). A global springboard furnishes new impetus,
new visions, and new horizons, which, along with
newly acquired capabilities, enables these firms to
attain higher levels of competence and a stronger
home base, both of which then fortify their global
spring. EMNE executives have to skillfully maneuver their strategic choices within their domestic
institutional contexts. Firms that compete and
upgrade successfully are often led by executives
who have a sharp global vision yet with pragmatic
measures to tap into foreign markets that provide
resource-seeking or market-seeking opportunities
(Luo & Tung, 2007).
The springboard view sheds light on the firms’
unique behaviors, motives, and activities, integrating inward internationalization (experience, networks, absorptive capability, and activities) and
outward internationalization and explicating leapfrog trajectories to mirror the springboard act. It
explains that springboard firms tend to internationalize rapidly, not incrementally. Parachuting
internationalization, a notion that has been introduced by Fang, Tung, Nematshahi, and Berg (2017),
parallels springboarding in this regard by showing
that firms can successfully enter into psychically
distant markets through the adoption of creative
strategies, such as ‘‘correct positioning, swift
actions, and fast learning.’’ As global latecomers,
they accelerate their pace of internationalization so
as to catch up with that of incumbents. This view
suggests that while organizational learning and
international experience or evolution are still
important to them, these firms are often radical in
bypassing cross-country, cross-region distances
(cultural, institutional, economic, and geographic).
Often, they first venture into advanced markets.
Similarly, their initial commitment tends to be
large and does not necessarily involve many small
steps. Also, departing from the conventional wisdom of control, EMNEs tend to recruit host country
nationals as members of the senior management
team rather than deploying parent country nationals, and tend to delegate more power to foreign
subsidiary managers than traditional MNEs (Wang
et al., 2014). The springboard discourse elaborates
on firm-, market-, and institution-level forces that
prompt or support springboard behaviors.
Contextual differences also exist between the new
vis-à-vis traditional views toward MNEs. Finally,
this view explains, though briefly, the challenges to
both EMNEs in general and to springboard behaviors in particular. For instance, poor accountability
and weak corporate governance may tarnish the
process and outcome of springboard endeavors.
They face enormous post-springboard, post-acquisition difficulties, ranging from building effective
working relationships with host country stakeholders, reconciling disparate national- and corporatelevel cultures, retaining local talent, organizing
globally dispersed complex activities, to integrating
home and host country operations.
The springboard view has been supported and
validated by numerous studies. For example,
Gubbi, Aulakh, Ray, Sarkar, and Chittoor (2010)
analyzed 425 cross-border acquisitions by Indian
firms during 2000–2007, confirming that international acquisitions facilitate internalization of tangible and intangible resources that are both difficult
to trade through market transactions and take time
to develop internally. The magnitude of value
created will be even higher when the target firms
are located in advanced economic and institutional
environments. Kedia, Gaffney, and Clampit (2012)
demonstrate that the EMNEs’ ability to overcome
their inherent disadvantages as latecomers relies
heavily on their capability to seek knowledge
outside of their home country through OFDI and
that such knowledge-seeking OFDI is not based on
the traditional asset-exploitation model of FDI, but
rather focused on asset-augmentation. Li, Li, and
Shapiro (2012) confirmed the notion that an
important catchup strategy for EMNEs is to invest
in developed markets that have industry-specific
comparative technological advantages. Bae, Purda,
Welker, and Zhong (2013) demonstrate that EMNEs
use international expansion as a way to circumvent
the institutional and market constraints they face
at home and to acquire the resources they need to
compete globally. Their findings, based on a longitudinal analysis (1991–2009) of credit rating data
by Standard & Poor’s, also confirmed our proposition that EMNEs use internationally known market
intermediaries to mitigate their poor perceptions of
weak governance, transparency, and accountability. Kothari, Kotabe, and Murphy (2013) and
Kotabe and Kothari (2016) employed an inductive
approach by performing a historical analysis of
Chinese and Indian MNEs, and concluded that
EMNEs’ foreign expansion is driven by both assetseeking (acquiring resources and absorbing them to
Journal of International Business Studies
A general theory of springboard MNEs
Yadong Luo and Rosalie L Tung
134
build their own advantage) and opportunity-seeking (finding foreign market niches and entering
into markets untapped by AMNEs) motives.
More recently, Satta, Parola, and Persico (2014)
compared EMNEs with AMNEs, stressing the important role of inward FDI in boosting EMNEs’ OFDI.
They also find that the effect of psychic distance is
not significant to EMNEs. Also comparing EMNEs
with AMNEs, De Beule, Elia, and Piscitello (2014)
conclude that EMNEs acquire less control than
AMNEs, especially in high-tech industries, while
institutional distance in trade and investment
freedom effectively increase the probability for
EMNEs to undertake full acquisition as opposed to
AMNEs. Focusing on autonomy delegation to foreign flagship subsidiaries by Chinese MNEs, Wang
et al. (2014) suggests that decentralization is often
used to facilitate the springboard act in assetseeking and opportunity-seeking. Based on a sample of 1004 cross-border acquisitions undertaken by
Indian firms during the period 2000–2010, Gubbi
and Elango (2016) find that seeking critical assets is
a key motivation for EMNEs to make acquisitions in
foreign markets, especially those in developed
economies. Gaffney, Karst, and Clampit (2016)
compared BRIC country MNEs with UK MNEs,
confirming that, in order to facilitate the transfer of
critical or tacit assets during cross-border acquisitions, EMNEs pursue higher levels of equity participation or full acquisition when targets are based in
locations that are institutionally distant in terms of
knowledge protection.
A major limitation of the springboard view, and
essentially most views toward EMNEs, is a deficit in
articulating how exactly EMNEs differ from AMNEs
in their respective ownership advantages before,
during, and after expanding internationally. As
Ramamurti (2012), Cuervo-Cazurra (2012), Hennart (2012), and Verbeke and Kano (2015) stated,
EMNEs do possess some ownership advantages, but
these are different from the ones we have been
trained and conditioned to see in AMNEs. Little is
known about how such home-built or home-grown
ownership advantages can be transferred and utilized as they go global. The springboard view
suggests both opportunity-seeking (e.g., exploiting
ownership advantages and market opportunities in
other developing economies) and asset-seeking
(e.g., acquiring critical capabilities from mature
MNEs in advanced economies). Explanations are
needed regarding what such advantages are and
how they are leveraged. Two, the springboard view
emphasizes the importance of the home base in
Journal of International Business Studies
both impelling capability augmentations via the
acquisition of foreign strategic assets and re-catapulting global expansion later from this base by
leveraging upgraded capabilities. This view stops
short of fully elucidating reinforcing and successive
linkages, processes, and mechanisms between
home base and global expansion. One particular
challenge for EMNEs pertains to their weak skills in
organizing the transfer, diffusion, and integration
of what they have acquired abroad with what they
already possess at home. To compensate for the
firm’s competitive disadvantage, it is essential to
integrate and organize capabilities ex post foreign
acquisitions. Although it is beyond the scope of the
springboard view, post-springboard integration or
orchestration is critical to understanding the
growth of EMNEs.
Three, the springboard perspective ignores soft
power deficits of many EMMEs that can affect the
host country nationals’ attitudes and policies
toward investors from emerging markets. Four,
the springboard view suggests that there are multiple goals and motives underlying SMNE expansion, but why and how to bundle these multiple
objectives has yet to be explained. For example, it is
possible that a firm may simultaneously pursue
market opportunities and institutional arbitrage
from the same OFDI project. Acquiring foreign
strategic assets may be comingled with capability
acquisition and enhancement of both global and
home reputation. A more comprehensive explanation of interconnectivity of multiple goals and acts
is needed in the literature. Finally, the view does
not adequately address the evolution of SMNEs.
When and where will they be path dependent or
otherwise path departure as they grow? Further, it is
incorrect to assume that organizational learning
and foreign experience are not important to them.
Viewed from a long-term perspective, SMNEs are
and will continue to be evolutionary.
COMPARING THE SPRINGBOARD VIEW
WITH OTHER THEORIES
Table 1 offers a comparison of the springboard view
with other major perspectives toward EMNEs such
as the LLL (linkage, leverage, and learning) framework, unique advantage logic, and institutional
arbitrage logic, which are a set of prevalent EMNEspecific perspectives (Luo & Zhang, 2016). The
springboard view and the LLL framework (Mathews, 2002, 2006) both recognize an accelerating
trajectory of some emerging market firms in
A general theory of springboard MNEs
Yadong Luo and Rosalie L Tung
135
Table 1 Comparing springboard with other views on EMNEs
Springboard perspective (SP)
Key points
SP focuses on the logic that
EMNEs systematically and
recursively use international
expansion as a springboard
to achieve multiple strategic
goals such as acquire
strategic assets, compensate
for their disadvantages,
exploit unique strengths, and
cope with home institutions
Home market exploitation
and global competitiveness
catchup motivate them to
acquire strategic assets and
to springboard
Linkage–leverage–learning
framework (LLL)
Ownership (but unique)
advantage logic (OA)
Institutional arbitrage logic (IA)
The 1st ‘‘L’’ draws attention to
how Asian MNEs (e.g., from
Singapore, Hong Kong,
Taiwan, and South Korea)
overcame resource deficiencies
by accessing superior external
resources via linkage
(partnerships). The 2nd ‘‘L’’
refers to the ways that links
with incumbents can be
leveraged. The 3rd ‘‘L’’ refers to
the learning resulting from
repeated application of linkage
and leverage processes (see
Mathews, 2002, 2006)
LLL focuses on very large Asian
firms from newly industrialized
economies
EMNEs have ownership
advantages before going global
yet these advantages may differ
from AMNEs, such as deep
understanding of customer
needs, operating in difficult
environment, low-cost ability,
right feature-price mix
(Dunning, Kim, & Park, 2008;
Ramamurti, 2009; Rugman,
2009)
These advantages are contextspecific, reflecting home
country or country-of-origin
conditions (Narula, 2012;
Ramamurti, 2012)
Escapism or exit view: EMNEs
go global to distance
themselves from or avoid weak
institutional environments at
home (Boisot & Meyer, 2008;
Witt & Lewin, 2007;
Yamakawa, Peng, & Deeds,
2008). It is especially so when
they invest in advanced
markets where property rights
are better protected
Exploitation view: EMNEs are
adept at competing in other
developing countries with weak
institutions because they are
accustomed to, and
knowledgeable in handing,
such hardship and uncertainty.
They are superior in surviving in
such conditions (CuervoCazurra & Genc, 2008)
LLL is less concerned with
institutional conditions at home
and host countries
A firm’s home market growth
plays a larger role in SP than in
LLL
Acquiring strategic assets to
compensate for the firm’s
weaknesses is key per SP, and
less so per LLL
SP explains logic of radical
expansion such as M&As
SP addresses a continuous and
upward spiral link between
home country and foreign
expansion; LLL doesn’t deal
with it
Undoubtedly, every firm must
possess certain firm-specific
advantages (even compete
locally), yet OA needs more
explanation on what specific
advantages they have, and how
much such advantages are
valuable and transferable across
borders
SP states that springboard act is
a critical and special capability
of EMNEs, underpinned by
their sharpened firm-specific
ability in intelligence,
networking, entrepreneurial
leadership, and speed. OA
should embrace this
SP acknowledges both
advantage leveraging especially
for market-seeking and
disadvantage compensation via
strategic assets and capability
acquisition; OA focuses mainly
on the former
IA focuses on the logic that
EMNEs can leverage
institutional arbitrage by
utilizing their skillset in
adapting to institutional
pressure that is difficult to
Western firms, or just benefit
from better institutional
environment overseas
SP addresses the institutional
arbitrage too but it also
explains other unique motives
and behaviors of EMNEs. SP
assumes that springboard act is
intended to achieve multiple
strategic goals and benefits
beyond institutional
IA has to reconcile the
coexistence of escapism and
exploitation views for
diversified firms investing in
both developed and less
developed countries
IA is laudable in bringing in the
unique institutional insight but
it warrants to integrate this
insight with market-seeking
and capability-seeking act
Distinctions
Journal of International Business Studies
A general theory of springboard MNEs
Yadong Luo and Rosalie L Tung
136
Table 1 (Continued)
Springboard perspective (SP)
Linkage–leverage–learning
framework (LLL)
Ownership (but unique)
advantage logic (OA)
Institutional arbitrage logic (IA)
Both intend to address the
question of how non-Western
firms can become competitive
through international
expansion
Both views recognize that the
influential monopolistic
advantage logic may not apply
well to normal run of these
firms
Both recognize the use of
networks and partnerships
For foreign market
opportunity-seeking EMNEs,
both SP and OA state the
importance of advantages in
products, marketing, price, and
technology
In the long run, springboard
will augment and create more
ownership advantages for
EMNEs. Virtually all EMNEs aim
to catch up and be more
competitive both home and
abroad
Relational capability as
ownership advantage can be a
common ground shared by SP,
OA, and others
Both IA and SP delineate links
between home and host
conditions
Both IA and SP acknowledge
that home governments and
their policies matter. Promarket reforms and property
rights protection at home
influence EMNEs’ OFDI
Both IA and SP need to offer
more nuanced insights into
internal differentiations within
EMNEs, even from the same
home country, e.g., who would
escape, and when and where
to go?
Complementarity
internationalization, the use of linkages or networks in this pursuit, and the quest to overcome
resource deficiencies by accessing superior external
resources. The LLL framework focuses on large
Asian MNEs from newly industrialized economies
such as Singapore, South Korea, Hong Kong, and
Taiwan, which embarked on massive OFDI in the
early 1990s in response to their small home market
base, increased domestic labor costs, and appreciation of home country currencies. Inherently, they
differ from numerous EMNEs that began large-scale
internationalization a decade later with a different
dominant intent (e.g., bolster and leverage their
home base by upgrading capabilities through global
expansion and M&As for the latter). Also, the LLL
framework does not deal with institutional pressures in home and host countries.4
Ramamurti (2009, 2012), Rugman (2009), and
Dunning et al. (2008) argue that EMNEs still have
some ownership advantages before going global but
such advantages may differ from those possessed by
AMNEs. The former, for example, may have some
potent edge in understanding customer needs,
operating in difficult environments, maintaining a
low-cost position, and offering right feature-price
mix. These advantages, as reminded by Ramamurti
(2012) and Narula (2012), are context-specific,
reflecting the home country or country-of-origin
conditions, which imply low transferability to
contexts that are hugely dissimilar. This ownership
(but unique) advantage logic accords with the
Journal of International Business Studies
springboard view in that both perspectives recognize a likelihood that some unique advantages
possessed by EMNEs are context-specific (e.g.,
products offered to mass middle-class or belowmiddle-class consumers), thus constraining transferability of these advantages. Relational capability
as EMNEs’ ownership advantage is also consistently
acknowledged by these views. The springboard
view suggests that EMNEs seek to catch up and be
competitive in both domestic and international
markets. Ultimately, the springboard act will augment and create more ownership advantages in the
aggregate which allows the firm to better compete.
Nevertheless, the springboard view sees OFDI as a
flexible board to jump (capability upgrading), augment (compensating disadvantages at home), and
re-catapult domestically and internationally to new
heights. It also illustrates that the springboard act
itself is a critical and special capability, involving a
firm’s adeptness in business intelligence, foreign
networking, and entrepreneurial leadership (Luo &
Tung, 2007). Rui and Yip (2008) suggest that an
EMNE’s strategic intent that goes beyond the
conventional logic of leveraging ownership advantage is an important driver of their OFDI decisions.
Sun, Peng, Ren, and Yan (2012) analyzed 1526
cross-border M&As by Chinese and Indian MNEs,
and found that comparative ownership advantages
in areas such as national factor endowments,
institutional constraints, and industrial supportiveness are also significant drivers of their M&As.
A general theory of springboard MNEs
Yadong Luo and Rosalie L Tung
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Institutional arbitrage logic encompasses passive
(escapism) and active (exploitation) notions. An
escapism notion stresses that EMNEs go global in
order to avoid weak institutional environments at
home (Boisot & Meyer, 2008; Witt & Lewin, 2007;
Yamakawa et al., 2008). They tend to do so by
investing in advanced markets where property
rights are better protected and institutional conditions are more conducive to business development.
The exploitation view highlights that EMNEs are
adept at competing in developing countries with
weak institutions because they are accustomed to,
and knowledgeable in handing, such hardship and
uncertainty. They are superior to AMNEs in surviving under such conditions (Cuervo-Cazurra &
Genc, 2008). This logic is commendable in so far
that it conveys institutional insights, but it is
limited in its ability to combine institutional logic
with
market-seeking
and
capability-seeking
rationality. EMNEs globalize not merely as a
response to institutional forces but as a strategic
act for capability augmentation and market-seeking. The springboard view thus acknowledges more
strategic motives and traits than does institutional
arbitrage logic. Future research in institutional
arbitrage should seek to unify both passive and
active notions for the same firm when it diversifies
its investments in varying types of economies
wherein both exploitation and escapism benefits
can concurrently ensue. The springboard view and
institutional arbitrage both explicate the links
between home and host country conditions,
acknowledging that home country governments
and their policies are important to EMNEs’ expansion. Nonetheless, both views need further development in illuminating dynamic changes – how the
firm evolves from its initial pursuit of institutional
arbitrage to subsequent pursuit of market opportunities, for example. It is unlikely that an EMNE will
remain focused solely on institutional arbitrage
without later seeking for host country market
opportunities and/or resource opportunities.
Table 2 summarizes the comparison between the
springboard view and other IB theories.5 This
comparison allows us to see abundant complementarities and differences. Contrasting to the eclectic
paradigm (Dunning, 1981, 1988; Rugman, 2009),
the springboard view does not see the possession of
conventional ownership advantages such as proprietary technologies and market power as a precondition to go global, and it focuses instead on
acquiring critical capabilities that compensate for
the firm’s competence void. The springboard view
realizes the importance of internalization, but it
interprets internalization mainly as transferring
acquired foreign strategic assets back home and
subsequently catapult at and from home with
solidified capabilities. That said, the springboard
view and the OLI paradigm are highly complementary in that springboard is not just an act but a firmspecific capability that reflects the firm’s ability in
identifying, negotiating, acquiring, and combining
skills. As explained later, SMNEs do possess unique
ownership-specific advantages, and thus the
explanatory logic of ownership- or firm-specific
advantages works well for springboard firms. In
post-springboard operations, MNEs will increasingly engage in internalization and orchestration,
and will use their home as the base platform for
integrating their globally dispersed activities.
Finally, location advantages (e.g., Porter’s diamond
forces) are relevant to SMNEs pursuing overseas
market opportunities and global economy of scale.
Institutional arbitrage opportunities can be considered as special location advantages as well.
The springboard act is an evolving process but it
differs substantively from the conventional logic of
internationalization process represented by Johanson and Vahlne (1977, 2009). The springboard view
does not presume that a firm’s expansion process
necessarily involves a series of incremental steps
nor does it postulate that a lack of knowledge and
experience is a big obstacle to this expansion. It
does not base its premise on an assumption that the
firm enters and furthers new markets via progressively greater psychic distance. While the springboard view recognizes the learning and experience
effect, it does not correlate the springboard moves
with the accumulation of host country-specific
market experience. These differences are easy to
understand because SMNEs are compelled to overcome their global latecomer disadvantages, while
their dominant intent is to acquire strategic assets.
Increased global connectivity also attenuates cultural and geographic divides, while amplified availability of global open resources and intermediary
resources lessen the necessity of path dependence
in the internationalization process. That said,
springboard moves do involve organizational learning in globalization. Global experience is and will
continue to be one of the major determinants for
these firms’ global success during their post-springboard expansion. Much of such experience is tacit
and firm-specific (Buckley et al., 2016).
The springboard view meshes well with internalization theory (especially the new internalization
Journal of International Business Studies
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Table 2 Comparing springboard perspective with other IB theories
Springboard
perspective (SP)
Major arguments
EMNEs use int’l expansion
as a springboard to acquire
strategic resources, reduce
home institutional
constraints, overcome
laggard disadvantages,
and compensate for their
weaknesses via a series of
aggressive measures like
M&As
SP explicates unique traits,
motives, strategies,
fostering or constraining
factors, and risks and
challenges involving
springboard behavior
OLI paradigm (OLI)
Internationalization
process theory (IPT)
Internalization theory
(IT)
RBV/dynamic capability
(RBV and DCT)
OLI (O) emphasizes
possession of proprietary or
ownership-specific resources,
market power, or
monopolistic advantage as the
prerequisite for going global
OLI (I) suggests that
internalization serves as a
unified, integrated intrafirm
governance structure due
either to no external market or
to deficiency and imperfection
of such market for
intermediate products needed
by MNEs
OLI (L) argues that MNEs
locate manufacturing activities
in countries that are the most
advantageous for cost (e.g.,
labor) and revenue (e.g.,
market demand)
considerations
The Uppsala model sees int’l
expansion as a process
involving a series of
incremental steps, assuming
that lack of knowledge and
experience is a big obstacle to
this expansion
Incrementally and farsightedly
accumulated knowledge and
experience on countryspecific market, practices, and
environment increases the
firm’s local commitment and
reduces uncertainty
The firm enters and furthers
new markets via progressively
greater psychic distance.
Commitment increases as
both experiential and
objective knowledge increase
Internalization unfolds via a
unified, integrated intra-MNE
governance structure, which
is even more critical when
market is inefficient
Firms choose the least cost
location for each activity they
perform, and they grow by
internalizing markets up to
the point where the benefits
of further internalization are
outweighed by the costs
MNEs internalize the market
in knowledge within the firm.
Proprietary knowledge flows
within the firm are superior
New IT focuses on the
dynamics of int’l governance,
whereby value creation
hinges on successful
knowledge recombination
and governance choices
The fundamental principle of
RBV is that the basis for a
competitive advantage of the
firm lies primarily in the
development of the bundle of
resources that are valuable,
rare, inimitable, and nonsubstitutable. Such resources
should be heterogeneous in
nature and not perfectly
mobile
DCT addresses a firm’s ability
to build, integrate, and
reconfigure competencies to
cope with rapidly changing
environments. It underscores
internal processes, routines,
and practices for coordination,
integration, learning,
adaptation, and
reconfiguration
Dynamic capability requires a
strong base of established
capability and an ability to
efficiently deploy,
evolutionarily reconfigure,
and continuously upgrade
them
Unlike OLI, SP does not see
possession of conventional
ownership advantages such as
proprietary technologies,
market power, and global
brands as a precondition to go
global. Instead it centrals on
going global to fill in these
areas they are weak
SP assumes that global
markets for intermediaries and
open resources have
improved. EMNEs internalize,
less for addressing
imperfection of intermediary
markets but more for
integrating major capabilities
they acquired back to home,
then furthering their global
competitiveness
SP doesn’t assume that how
country location advantages
such as labor costs are central
to EMNEs’ decisions but
institutional environment,
resources availability, and
mass markets matter
Per SP, distance matters less
for EMNEs due partly to
global connectivity and partly
to their strategic intent
Springboard act is often
radical and aggressive, not
incremental, because EMNEs
need to circumvent
laggardness and lateness visà-vis established global rivals
Path dependence (including
experiential knowledge) and
sequential foreign entry or
OFDI are strong logic for IPT,
but much less so for SP
Per IPT, an initial option
involves a small amount of
OFDI used to explore
opportunities in a host
country. Once enough
experience is gained and the
option class for further
investment, the MNE will
increase its commitment to
exploit more opportunities.
EMNEs show a less propensity
to this pathway
SP emphasizes how MNEs
internationally expand in
order to compensate for their
capability weaknesses via
capability acquisitions, while
IT focuses more on leveraging
a firm’s strengths (both
internal governance and firmspecific advantages)
Key intermediary product
(including technology)
market conditions and global
open markets for key
resources have noticeably
improved since internalization
theory was introduced,
spurring springboard in the
21st century
Home market or home base
plays a central role in SP for
the MNE’s overall growth and
development, which is not
the focus of IT
Home country institutions
and institutional arbitrage is
another central element of
SP, but less so in IT
SP focuses on entrance stage
of global expansion,
explaining what motivate
EMNEs to go global in a
radical and risk-taking way,
whereas RBV and DCT discuss
what are and how to build
sustained distinctive
capabilities and competitive
advantages
SP applies only to EMNEs
going global and undertaking
OFDI; RBV and DCT apply
broadly to all kinds of firms in
various contexts although
they are not specifically IB
theories
Global dimensions of RBV and
DCT are not explicitly
articulated, but there exists a
great potential to extend
them to global competition
and global competitiveness
RBV and DCT remind us that
not all resources and
capabilities can be acquired or
attained by EMNEs via crossborder M&As. Even IF they do,
many deeply embedded
processes and routines
associated with such
capabilities within the firm are
sticky, tacit, and nontransferable
Differences
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Yadong Luo and Rosalie L Tung
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Table 2 (Continued)
Springboard
perspective (SP)
OLI paradigm (OLI)
Internationalization
process theory (IPT)
Internalization theory
(IT)
RBV/dynamic capability
(RBV and DCT)
Springboard is not merely an
act but a unique capability
that is firm-specific, involving
business intelligence,
acquisition capability, and
combinative skills
In post-springboard
operations, EMNEs will
increasingly engage in
internalization and
orchestration, and will use
home as the base platform to
be integrated with their
globally dispersed activities
Location advantages (e.g.,
Porter’s diamond factors) are
relevant to EMNEs pursuing
overseas market opportunities
and global economy of scale.
Institutional arbitrage
opportunities are viewed as
location advantage too
While SP deals less with
evolutionary processes, both
SP and IPT acknowledge the
importance of organizational
learning in globalization
International expansion can
be regarded as an optional
window permitting MNEs to
gain more tacit knowledge
about int’l expansion and
competition in general, and
the host country in particular.
IPT (more directly) and SP
(more indirectly) both share
this tenet
Global experience is, or will
be, one of the major
determinants for EMNEs’
global success during their
post-springboard expansion
Both IT and SP addressed
resource recombination.
Integration and orchestration
within the MNE are critical in
both theories
Both IT and SP view
internationalization as a
dynamic, multifaceted
process, whereby strategic
governance modes are
subject to change over time;
Both IT and SP (upward
spiral) articulated the
importance and process of
internalized governing of
global value chain
Both explained capability and
resource flows within a
globally differentiated yet
centrally coordinated and
integrated intra-MNE system
EMNEs must build their own
distinctive capabilities (RBV)
and dynamic capabilities
(DCT), especially after
springboard. The ultimate
goal of EMNEs is to solidify
their global competitiveness
The notion of capability
deployment, transfer,
alignment, and upgrading is
profoundly critical to all
MNEs, EMNEs included, in a
global setting. Postspringboard success rests
squarely on such deployment,
transfer, integration, and
reconfiguration
A successful springboard act
involves well-designed global
planning and opportunity
identification skills, and
execution of such plans
requires distinctive
capabilities, routines, and
processes both overseas and
at home
Complementarity
theory) in multiple regards. Both explain the importance of resource recombination and view internationalization as a dynamic, multifaceted process (see
Narula & Verbeke, 2015; Verbeke & Kano, 2015). Both
articulate the importance of orchestrating an evolving process and internalized governing of global value
chain (see Kano, 2017). Nonetheless, the springboard
view emphasizes how MNEs expand in order to
compensate for their capability weaknesses through
aggressive capability acquisitions, while internalization theory focuses more on leveraging a firm’s
strengths (both internal governance and firm-specific
advantages). Market conditions (including markets
for intermediary products and technologies) in the
two different periods of time when internalization
and springboard perspectives were introduced,
respectively, noticeably differ too. Global open markets for key resources are profusely improved in the
21st century. Also, home market and home base play
a central role in EMNEs’ overall growth and long-term
development, and such a role is not the focus of the
internalization logic. Finally, home country institutions, together with offensive or defensive arbitrage
arising from institutional differences between home
and host countries, is another central element of the
springboard perspective, which, however, is not an
emphasis of the internalization theory.
The springboard view shares a key tenet of
dynamic capability theory (DCT) in that a firm’s
sustained growth depends on its sharpened ability to
integrate, diffuse, adapt, and reconfigure its key
resources to cope with changing environments. The
central goal behind springboard is to augment and
upgrade the firm’s critical resources and capabilities,
which aligns with DCT in global competition. More
recently, Teece (2014) added that dynamic capability should be coupled with good strategy as a
necessary condition to sustain superior performance
in fast-moving global environments. The springboard act is a deliberate strategy for capability
catchup and upgrading with the objective to be
savvy in competing against AMNEs. As more
research is needed to address post-springboard activities and processes, we see an upright convergence
between DCT and post-springboard orchestration of
globally dispersed operations. The ultimate goal of
SMNEs is to fortify their global competitiveness, and
to this end the notions of capability composition,
redeployment, and reconfiguration are cogent to
diagnose post-springboard organizing, managing,
harnessing, and harvesting. Nonetheless, the springboard view does not carry broad implications as does
DCT or RBV that applies to a wider range and kinds of
firms in various contexts. It also differs from DCT or
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Yadong Luo and Rosalie L Tung
140
RBV in that the latter requires a strong base of
established capabilities. It would be fascinating to
probe how springboard strategies, coupled with the
firms’ resilience, buttress their subsequent dynamic
capabilities evolutionarily, and how they transform
their acquired strategic assets and resources later into
a bundle of distinctive capabilities that are valuable,
rare, inimitable, and non-substitutable. We know
little on routines, processes, and mechanisms, which
may be deeply embedded within the firm, that
propel such a transformation.
UNDERSTANDING THE PECULIARITY
OF SPRINGBOARD MNES
Despite growing inquiries on SMNEs, the majority of
research addresses internationalization motives,
entry strategies, and institutional effect (see review
by Luo & Zhang, 2016), while a big lacuna remains
on studies of their unique strengths and weaknesses.
Ramamurti (2012) and Cuervo-Cazurra (2012) state
that emerging market firms must possess some
unique ownership advantages before and during
their internationalization, but, as they point out, we
know little about what exactly these advantages or
disadvantages are. In this article, we submit that
unique advantages (realized or potential) of springboard firms lie in amalgamation, ambidexterity, and
adaptability (AAA). It is reported, for instance, that
EMNEs have a competitive edge over AMNEs in cost
and speed advantages (Guillén & Garcı́a-Canal,
2009; Ramamurti, 2012; Sun et al., 2012; Wells,
1983), learning and linkage advantages (Elango &
Pattnaik, 2007; Govindarajan & Ramamurti, 2011;
Mathews, 2006; Zhou et al., 2010), and their ability
to transform institutional disadvantages into advantages (Cuervo-Cazurra & Genc, 2008; Gaur, Kumar,
& Singh, 2014; Hoskisson et al., 2013). We echo these
observations, but underlying these advantages, we
suggest, are these firms’ deeper abilities in amalgamation, ambidexterity, and adaptation. These capabilities are not entirely new or applicable only to
SMNEs. We caution too that these firms vary among
themselves in such capabilities.
Amalgamation
Amalgamation means an MNE’s ability to creatively
improvise and combine all available (internal and
external) resources (including those purchased
from global open markets), creating impressive
price–value ratios suited to mass global and domestic consumers who are generally cost-sensitive.
Journal of International Business Studies
These firms are able to compete by creatively
assembling and integrating the open and generic
resources they possess or purchase; that is, they are
astute in distinctively identifying, leveraging, and
combining available resources, both external and
internal, to create some temporary competitive
advantage in cost, speed, and price–value ratios
(Luo & Child, 2015). The springboard act helps
amalgamation via identifying and acquiring key
resources, exploiting market opportunities, and
building global networks. Amalgamation involves
identification (detecting needed resources and
amalgamation opportunities), composition (combining technologies, resources, product features,
and functions), and exploitation (using a mixture
of competitive means such as combined low cost
and extended features). The composition-based
view developed by Luo and Child (2015) offers a
foundational understanding of amalgamation.
SMNEs generally have competitive disadvantages
in global brands, core technologies, high-end customer bases, and original innovation compared with
long-established MNEs from developed economies.
What they are good at, however, is sharpened skills in
improvising all existing and available resources,
combining new product features and functions in a
cost-effective fashion, and responding quickly to
mass market needs (Luo & Child, 2015). Improved
global open markets (e.g., applied technologies) and
springboard opportunities jointly alleviate the burden for these firms to invest heavily in R&D, and in
many industries enable them to skip multi-generations of technological development conducted by
established AMNEs. Meanwhile, many advanced
country firms specializing in industrial design, technological configurations, and modularity of technologies provide sophisticated industrial services to
springboard firms. While cross-boundary, cross-sector open markets for technologies, key components,
industrial design, and other key inputs facilitate this
phenomenon, amalgamation actions and processes
do involve some degree or fashion of creativity. It is
indeed difficult for firms to sustain competitive
advantages by amalgamation; however, by creatively
or innovatively combining and integrating different
yet suitable technologies and complementary product features and services that bring in greater
convenience, experience, and values to the world’s
mass middle-class and below-middle-class customers
who care about price–value ratios, amalgamation can
create some temporary competitive edge.
Per Luo and Child (2015), composition-based
strategy is manifested in compositional offering
A general theory of springboard MNEs
Yadong Luo and Rosalie L Tung
141
and compositional competition. This applies to
businesses that engage in springboard as well.
Compositional offering occurs when a firm amalgamates an extended array of its products’ performance features and functions, as well as services for
existing customers whose satisfaction increases as a
result of this extension and amalgamation (e.g.,
one-stop for all or total business solutions). This
approach works because it provides customers with
amplified services, value, convenience, and time
savings, yet does so at a fraction of the cost of nonamalgamated or separated functions or services.
Asset-seeking springboard provides the firms with
technologies and resources needed for compositional offering, while opportunity-seeking springboard extends foreign markets in which
compositional offering can be harvested. The rise
of open architecture or platforms that assemble and
reconfigure various technologies and functions also
stimulates compositional offering.
Compositional competition exists when an
SMNE uses a set of combined and integrated means
or measures to compete against rivals (e.g., combining cost, price, product features, speed, and
design-based customization), providing customers
with superior price–value ratios. Compositional
competition seeks to exploit opportunities associated with mass markets (middle-class, below-middle-class, and base-of-pyramid consumers). They
compete on the basis of a composition of combined
price, design, functionality, quality, features, volume, and services. With an exception of some large
companies, many of emerging market firms do not
possess global competitive advantages in areas such
as technology, brand, and market power in separation, but are able to compete when composing
building blocks of a competitive advantage. Springboard benefits these MNEs not only with imbuing
them new resources needed for compositional
competition but with more opportunities to understand and exploit global markets and to cultivate
global business networks and value-chain systems
imperative for compositional competition.
Both compositional offering and compositional
competition are underpinned by amalgamation
capability. This capability overlaps with the concept of combinative capability introduced by Kogut
and Zander (1992) that synthesizes current and
acquired knowledge. Both concepts stress the
importance of building up a dynamic perspective
of how firms learn new skills by recombining their
current capabilities. Both acknowledge the importance of regularities (e.g., routines, values,
processes) by which members cooperate in a social
community (i.e., group, organization, or network).
Still, amalgamation capability focuses more on a
firm’s distinctive ability to combine outside technologies, key components, specialized services, and
key resources from open channels with its own
resources, designs, and production so that its new
product offering has better performance features,
lower cost, and other improved attributes. For
SMNEs, this capability pertains more broadly to
the firm’s ability to exploit global resources creatively. It is also reinforced by their proficiency in
bricolage – the enduring practice or experience of
surviving under institutional hardship and pressure
– and creating order out of whatever resources are
available at the time. These firms utilize innovative
methods to employ limited resources during times
of uncertainty while creating conditions of stability
out of chaos. These companies have mastered the
art of improvisation, doing more with less, and
compositionally offering or competing with a
pragmatic approach that reflects their strength in
understanding
customer
needs
and
cost
constraints.
Ambidexterity
Springboard is a strategic means by which the firms
capture values of ambidexterity – acquiring global
resources they need and augmenting global competitiveness at new heights. Per the real option
logic (Kogut & Kulatilaka, 1994), this may create
option values of benefitting from both acquiring/
buying and augmentation/making. Ambidexterity
is a firm’s characteristic property to simultaneously
fulfill two disparate or conflicting goals that are
critical to the firm’s long-range success. Luo and
Rui (2009) suggest that some successful EMNEs are
ambidextrous in their co-orientation, co-competence, co-opetition, and co-evolution. Co-orientation is the ability of firms to concurrently pursue
short-term survival and evolving competitiveness
when competing overseas. Co-competence pertains
to their unique skills in utilizing transactional
competence and relational competence together.
Co-opetition underscores their superiority in balancing or harmonizing competition and cooperation with other business players. Finally, coevolution suggests that MNEs often perform both
local compliance and local influence at the same
time when dealing with institutional forces in a
host country.
Ambidexterity is reflective of the cultural backgrounds of MNEs from countries such as China,
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India, and East Asia. Chinese MNEs have a long
tradition in embracing harmony, cherishing trust
building in business ties, and caring long-term
growth in business planning. They may also be
better prepared than MNEs from other countries of
origin in adapting to and operating in institutionally harsh environments (e.g., weak legal system,
vague property right protection, and government
policy uncertainty). Their ability to thrive under
hardship helps prepare them to deal successfully
with the crises, make sound business decisions,
compromise with business stakeholders, and sacrifice during times of extreme austerity (Boisot &
Meyer, 2008; Cuervo-Cazurra & Genc, 2008; Luo &
Child, 2015). Many East Asian firms, for example,
have adopted the ‘‘middle way’’ as their philosophy
to formulate strategies, manage organizations, and
deal with external partners. ‘‘Mid-way’’ is the practice of non-extremism and a path of moderation
away from the extremes of self-indulgence and selfmortification. The harmony principle from Taoism
also suggests that opposite polarities are actually
balanced and work together through cycles, thus
creating a harmonious world. The yin–yang principle holds that opposite elements can mutually
transform into each other in a process of balancing
under various conditions. The spirit of this philosophy is coexistence and unity of opposites to form
the whole. It thus embodies duality, paradox, unity
in diversity, change, harmony, and offering a
holistic and dialectical view to the world (Li,
2010). These cultural traits spur ambidexterity
building both at home and abroad.
Here we emphasize several advantages associated
with ambidexterity beyond what prior research has
already revealed such as exploitation and exploration for firms in general (e.g., Gibson & Birkinshaw, 2004) as well as co-competence, coevolution, co-opetition, and co-orientation for
EMNEs in particular (Luo & Rui, 2009). First,
springboard allows a firm to compensate for competitive capability shortfalls via capability acquisition while capitalizing on their mass production,
cost position, and other advantages via foreign
market expansion. This juxtaposition enables
SMNEs to balance short-term gains (market expansion by leveraging existing capabilities) and longterm competitiveness (capability catchup and
upgrading). Second, institutional arbitrage harnesses both avoidance (reducing home country
institutional hardship via investing in developed
countries) and exploitation (utilizing their competence to survive under institutional asperity via
Journal of International Business Studies
investing in developing nations). Extant research
tends to treat this separately (either avoidance or
exploitation), which is still true for some EMNEs.
But as they grow and diversify, more EMNEs seek
both avoidance and exploitation under the institutional arbitrage logic. Third, a blend of imitation
and innovation illustrates ambidexterity as well. It
is true that many EMNEs evolve from imitation to
innovation but during such transformation they
perform and combine both in some creative ways.
This ambidexterity, or composition of imitation,
creation, and innovation, is used to develop a
composition-based competitive edge and to support future innovations as the firm continues to
evolve. Innovators’ products are seldom imitated in
their entirety. Instead, these firms select only those
aspects of the innovators’ offerings that fit their
goals. In addition, the imitated technology, design,
or function is often modified or improved before it
becomes a part of the imitator’s offerings.
SMNEs from emerging economies tend to be
structurally ambidextrous – sufficiently localizing
management and organization (including top management, HR, branding, R&D, distribution) of host
country operations while maintaining high global
integration of capability augmentation (an upward
spiral concept below elucidates this). Recent studies
(e.g., Wang et al., 2014) empirically confirm that
corporate offices of these firms tend to delegate
power to frontier subsidiaries in the springboard
process. While this needs to be validated, anecdotal
observations suggest that successful SMNEs are
ambidextrous in concurrently and interactively
performing overseas localization and home
anchoritism.
Adaptability
Adaptability has been widely used to denote a
firm’s ability to respond to a dynamic competitive
environment in order to reap opportunities and
neutralize threats (Grewal & Tansuhaj, 2001). Previous research has recognized the significance of
strategic flexibility, resilience, or adaptability as an
effective means by which to mitigate environmental uncertainty. Usually developed through a combination of flexible organizational structure,
resource slack, and a diverse portfolio of strategic
options, adaptability enables firms to manage and
exploit uncertain and fast-occurring opportunities
and threats while responding proactively to the
national and international circumstances confronting them (Evans, 1991; Kogut & Kulatilaka,
1994).
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We define adaptability as the organizational
capability to quickly identify and garner opportunities, adapt to market and environmental changes,
and compete and survive in tough conditions, over
the course of internationalization. It thus captures
agility, hardship surviving, and resilience. Not
every SMNE excels in adaptation, of course. Some
can rapidly adapt to institutional and market
differences between host and home countries, but
others cannot. These firms utilize their adaptability
offensively and defensively. Offensively, they establish flexibility to create initiatives and seize fastoccurring opportunities in domestic and global
markets. Defensively, they employ flexibility to
safeguard against unforeseen environmental or
market externalities, such as regulatory change,
political and legal uncertainty, and market
upheaval.
Adaptability is ascribed in part to the firms’
strong know-how and ability to cope with uncertainty, complexity, and unpredictability given their
long experience in dealing with instability and
rapid pace of change in their home countries
(Cuervo-Cazurra & Genc, 2008). Firms become
more agile under such variable conditions. Countries do differ in type, manifestation, and reason
behind various market and institutional complexities and volatilities; thus not all firm-level experience in dealing with such complexity is
transferable across nations. However, diversity of
experience is a catalyst to enable strong international performance (Peng, 2012). Moreover, firmlevel routines, knowledge, and experience
employed to navigate such complexity are valuable
in curbing complexity and uncertainty in general,
and institutional deterrence in particular, during
international expansion (Gaur et al., 2014; Guillén
& Garcı́a-Canal, 2009; Holburn & Zelner, 2010).
Adaptability has also been linked to hastened
learning, structural nimbleness, and entrepreneurial responsiveness, especially those that are privately owned. Rapid learning and absorptive
capability are the defining features of many successful SMNEs (Rui & Yip, 2008) and one of the
major strategic reasons motivating them to invest
overseas (Deng, 2009). Madhok and Keyhani (2012)
argue that EMNEs’ entrepreneurship helps overcome their liability of emergingness, stimulates
foreign adaptability, and spurs their catchup
through opportunity-seeking and capability transformation. Yiu et al. (2007) show that an EMNEs’
home country background in dealing with low
resource munificence and high institutional
complexity promotes their international adaptability, mediated further by the intensity of corporate
entrepreneurial transformation in the form of
innovation, new business creation, and strategic
renewal.
The emerging market MNEs’ hardship-surviving
capability merits special attention – this capability
includes their distinctive ability to operate and
survive in an institutionally austere environment
and to deal with demanding business stakeholders
(e.g., governments) that may impose significant
constraints over business activities in the host
countries. Not all institutional hardships or barriers
in new territories can be overcome by firms, but
EMNEs (state and private) typically have accumulated experience in dealing with hardships before
going global. This experience becomes extremely
useful when they invest in countries with similar
levels of governmental red tape, regulatory hindrance, policy uncertainty, weak legal protection,
poor public services, and corruption. While this
hardship increases transaction costs and uncertainty for all firms in the same host country, the
firms equipped with hardship-surviving capability
are more adaptable to such conditions and hence
more resilient to institutional and competitive
difficulties they encounter (Luo & Rui, 2009).
UPWARD SPIRAL IN SPRINGBOARD PROCESS
MNEs use international expansion as a springboard
to acquire foreign critical capabilities to be combined with their home-based competence portfolio
so as to catch up in global competition. Research by
Gubbi et al. (2010) has validated this point. For
MNEs to springboard internationally and improve
their competitive strength, it is imperative that
they not only exploit their limited competitive
strengths such as cost advantage, speed advantage,
and large-scale manufacturing, but to transfer
newly acquired strategic assets and valuable knowledge back to their domestic market value-chain
system (Luo & Tung, 2007). Critical to the success
of this strategy is their ability to integrate domestic
and foreign value-chain activities and transfer
relevant strategic assets and knowledge on demand
in time and space. This connection streamlines an
MNE’s globally and vertically integrated valuechain activities and optimizes the exploitation of
dual advantages of global resources they acquire
and home power they possess. Practice suggests
that many SMNEs are globally integrated (upstream
or downstream) and are heavily dependent on the
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home base for manufacturing, market share, and
growth. These characteristics require that firms
effectively leverage those skills they are adept at
(e.g., mass manufacturing for international midand low-end markets) during foreign expansion,
and subsequently incorporate newly acquired critical capabilities into the existing capability base.
Here we introduce a concept of upward spiral as a
new insight that helps us better understand the
springboard process. An upward spiral concept
suggests that MNEs grow through a deliberate selfimproving, positively reinforcing multi-stage process that consolidates and fortifies their essential
capabilities needed in subsequent global competition. As Figure 3 shows, an early stage of internationalization from inward FDI to radical OFDI is
primarily used to improve their capabilities. As they
transfer more and more of these capabilities back to
augment existing capability and resource portfolios
(thereby bolstering their domestic capability reservoir), they can reconstitute as more capable global
competitors. At the later stages, winning global
competition becomes the end and consistent capability argumentation becomes the means. Through
such an upward spiral or virtuous cycle, they
become increasingly powerful on the global stage.
This concept suggests that SMNEs, especially
those from emerging economies, must first develop
some basic skills and capabilities through inward
internationalization (Stage 1) and build a basic
Figure 3 An upward spiral model.
Journal of International Business Studies
knowledge base or experience that enables them to
move radically in OFDI (e.g., M&As) to tap the most
critical technologies, brands, and talents (Stage 2).
While establishing and developing a foothold in
carefully selected foreign markets or hubs, they
transfer acquired key resources and knowledge to
home operations or use these resources to compensate for what they are not good at in their quest to
become more competitive at home and abroad
(Stage 3). Orchestration is important in this stage.
They fortify their home base (including home
market competition) by exploiting their newly
acquired global capabilities and resources and,
through market experiment at home, further
improve and upgrade these capabilities, making
them more competent global players (Stage 4).
Creative combination and innovation are important at this stage. The ultimate goal of SMNEs is to
bolster their global competitiveness. To do so, they
use their reinvigorated home base and bolstered
capabilities to re-catapult globally with a new
assortment of arrows in their quiver (Stage 5). They
seek a larger economy of global scale associated
with mass production and technologies that are
extensively suitable, appropriable, and transferable
to a wide range of foreign markets and mass
consumers. Govindarajan and Ramamurti (2011)
suggest that MNEs, especially those from India and
China, undertake innovation at home before trickling up to rich countries (i.e., reverse innovation).
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145
We note that the upward spiral is a continuous
improvement process in which MNEs will continue
their capability upgrading even after Stage 5.
The upward spiral concept emphasizes the central role of home base for both capability upgrading
and market competition purposes. This home base
is more important for EMNEs than for AMNEs and
those from newly industrialized economies (e.g.,
South Korea, Singapore, Israel, and Taiwan). One,
EMNEs’ home base is large with huge potential.
Two, they are savvy to the institutional (formal and
informal) environment there, which is their competitive advantage. Three, their technologies, products, and even managerial styles suit home market
consumers. Four, they have successfully established
eco-business systems at home. Five, increased
global connectivity helps them connect their home
base with the rest of global operations via global
value-chain activities. It is much easier today for
companies to maintain connectivity than in the
past. SMNEs are taking advantage of that. To ensure
domestic operations can fully support the upward
spiral path, orchestration capability is key. Orchestration facilitates the springboard evolution by
helping convert globally acquired competencies
into improved parent core dexterity in areas such
as operations, production, marketing, and new
product development.
An upward spiral path is by no means linear nor
can execution be expected to be seamless. The
process may well encounter enormous difficulties
as an upward spiral requires immense planning and
cross-border orchestration of resources, knowledge,
and capabilities. Many SMNEs are not particularly
gifted in these areas. In some cases, a dearth of such
skills compels some of them to purposely forego
immediate integration in the first place, leaving
newly acquired foreign companies or units to run
their own operations independently for some
period of time, then transferring back some critical
resources that are ready for home-centered integration. In other words, the reintegration of global
resources or skills domestically may occur incrementally over time.
An upward spiral path is highly differentiated for
each MNE and even within the MNE itself. First,
they differ in market opportunity-seeking while
building and upgrading their home-centric capabilities. Some emphasize foreign market development and expansion early in the process in
conjunction with capability enhancement, while
others do not. While capability upgrading is a
common goal for SMNEs, they are not necessarily
the same in adopting a home-centric approach.
Some may place more emphasis on the central role
of their home base for capability building, others
may prefer a region-centric (e.g., Latin American
MNEs) or hub-centric (e.g., Korean MNEs) approach
that is less dependent on their home base. Further,
they may differ in terms of their domestic base
roles. Some may rely more on home market contributions than others. There are born-global companies and micro-MNEs from emerging markets
that do not need to depend on the home base nor
have to wait for the growth of the domestic market.
Within an MNE, some foreign units may serve to
provide the parent firm with technologies, brands,
or foreign market intelligence, while other units
may be instrumental in product and geographic
diversification, brand image establishment, and
reputation enhancement. Developing such a centrally coordinated yet internally differentiated system is not easy for any firm (Bartlett & Ghoshal,
1989). Pursuing these objectives requires a set of
guiding principles, organizational infrastructure,
and managerial procedures that underpins the
above inflows and outflows.
Implementing a successful upward spiral strategy
requires vision and skills from management at the
parent level, where executives seek and design ways
to pursue opportunities globally and implement
systems for continued renewal (Kotabe et al., 2011;
Teece, 2014). Parents identify which assets and
competencies are relevant and applicable to specific
locations, determine when and where a transfer is
needed, and reconfigure bundles of resources to
provide the necessary organizational infrastructure
for a successful transfer. In a globally dispersed
network configuration, the parent is the central
intelligence unit that not only looks for ways to
exploit existing resources in the network, but also
plays a major role in coordinating learning processes, exploring new opportunities, disseminating
knowledge, and renewing core competences (Buckley et al., 2016). Unlike the commonly held view
that EMNEs only transfer competencies to institutionally similar settings because domestically built
resources are irrelevant and inapplicable in developed markets (Cuervo-Cazurra & Genc, 2008),
practice suggests that specific competencies, in
whole or in part, could be applied even in institutionally more advanced environments when correctly identified. Beyond the identification of
transfer opportunities, management needs to
reconfigure and amalgamate existing competencies
to improve applicability. Further, these parents can
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146
adopt organizational systems, structures, incentive
schemes, and ICT systems that help organize and
ease the connection process between foreign and
domestic operations.6
Competently identifying transferrable capabilities and connecting, transferring and executing are
guided by leadership that reflects a clear vision.
This is embodied in a global architecture that
guides pursued flows of resources and capabilities
over time, and blueprints requisite organizational
transformations over time. The springboard strategy must be viewed as a long-range plan for
improved competitiveness (Luo & Tung, 2007),
and the upward spiral path exemplifies this strategy. Success is based on the pursuit of a bold vision
enacted by transformational leaders who articulate
strategic guidelines regarding how the organization
will be sinuously molded and remolded with each
iteration. This also includes setting distinct attainable goals, particularly for foreign units, that
encompass a time-phased approach for capability
acquisition and re-catapulting with consolidated
competencies. Innovation orientation, culture, and
policies are critical as well. It is doubtful that
SMNEs can build sustained global competitiveness
solely through the acquisition of foreign assets in
an expansive and aggressive way. Success is
achieved through capability upgrading and innovation, and springboard is a stepping stone to this
end. Bonaglia, Goldstein, and Mathews (2007)
validated this point, demonstrating that the successful growth of SMNEs depends on a combination
of accelerated internationalization and organizational innovation.
ORGANIZING AND MANAGING CAPABILITIES
IN SPRINGBOARD DYNAMICS
Needless to say, not every springboard act can
succeed. It depends on firm-specific organizing and
managing capabilities. Here we explain such capabilities from a micro-perspective – organizational
behavior, human resources, and cultural intelligence – important yet under-researched facets of a
successful springboard implementation. EMNEs
often struggle to assess, manage, and integrate
culture with organizational compatibility due to
their lack of cross-cultural management skills. In
reality, Chinese MNEs perceive their deficit in
international experience, low familiarity with business norms and practices in host countries, and
inability to bridge cultural differences as more
Journal of International Business Studies
significant challenges to OFDI than hard criteria
such as R&D capability, financing, and so on
(Beebe, 2006).
Particularly noteworthy is the shortage of international managerial talent among many EMNEs.
Even though China is the most populous country
in the world, it suffers from what Farrell and Grant
(2005) have characterized as the ‘‘paradox of
scarcity among plenty.’’ India, soon to overtake
China as the most populous country in the world,
shares the same challenge to a large extent. China
has greatly expanded the number of post-secondary
educational institutions to provide quality managerial training in addition to sending those with
high potentials to pursue advanced education
abroad. Unfortunately from China’s perspective,
the stay rate of foreign-educated Chinese abroad,
particularly in the US, is high (World HR Lab
Survey, 2004). China seeks to attract overseas
Chinese to return home upon completion of their
education abroad through several initiatives and
over time has been successful in attracting a
growing number of haigui (or returnees) to repatriate (Tung, 2016). However, in light of the intense
competition among nations around the world for
the same talent pool in a knowledge-based economy, there appears to be a reverse trend, known as
guihai, where returnees to China have left again.
Saxenian (2002) has dubbed this phenomenon as
‘‘brain circulation’’ whereby talent can flow back
and forth between one’s country of origin and
another country, typically an advanced economy.
To successfully manage their overseas operations,
MNEs cannot rely solely on the use of expatriates
for cost reasons and localization requirements.
While MNEs seek to hire highly qualified local
nationals to work for them in their foreign subsidiaries, surveys (Tung, 2007; Leung & Morris,
2015; Tung, 2016) reveal that host country nationals are not particularly attracted to working for
foreign bosses from emerging markets. The latter
are perceived as ‘‘low in expert power’’ (Leung &
Morris, 2015: 1045).7 This country-of-origin effect
may stem from the differences in level of economic
development and, in the case of China, ideologies.
Many locals cannot distinguish between Chinese
state-owned and private enterprises and are sometimes reluctant to work for what they perceive to be
an arm of the government (Tung, 2007). Even in
the case of Japan and South Korea, both OECD
countries that have embarked on FDI for some time
before the current crop of EMNEs, there is a
persistent resistance among many Americans to
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Yadong Luo and Rosalie L Tung
147
work for foreign bosses from these countries (Tung,
2014).
This generally unfavorable attitude by locals in
industrialized countries toward investors from
emerging markets may stem from the latter’s weak
soft power. The concept of ‘‘soft power’’ or ‘‘coopting’’ was introduced by Nye (1990) and affects
perception of a country’s ability to lead because of
its presumed legitimacy, resulting in a generally
more favorable attitude by outsiders of its culture
and ideology. In general, many people from industrialized countries perceive emerging markets as
weak in soft power.8 An inability to attract the best
and brightest local talent to work for overseas
subsidiaries of EMNEs can hinder these firms’
efforts in managing abroad and contribute to
ongoing problems in post-acquisition integration.
An inability to fully understand the cultural
norms and practices in host countries can also
render EMNEs more susceptible to legal challenges.
Korean MNEs, for example, have been targets of
multiple law suits filed by employees, for violation
of affirmative action (both race and gender discrimination) and sexual harassment allegations
(Cole & Deskins, 1988; Tung, 2014). Such highprofile cases can only frustrate an emerging market’s attempt to build up its country’s soft power.
Relatedly, building a positive image for both country of origin and EMNEs from these countries is a
challenge. For instance, in Africa where China
MNEs and the Chinese government have made
substantial investments estimated at $200 billion,
twice the amount from the US, some local nationals may be resentful of the investor practices of
exporting virtually everything to fuel infrastructure
and extractive projects in these countries (Solomon, 2017).
FUTURE RESEARCH AND SUGGESTED AGENDA
One complexity to examine SMNEs lies in heterogeneity among them. We noticed this issue in our
original article and introduced a typology along
business ownership and international diversification, categorizing these firms into world stage
aspirant, transnational agent, niche entrepreneur,
and commissioned specialist (Luo & Tung, 2007:
483). This, however, is inadequate to untangle the
differences among the group. SMNEs from varying
countries of origin and industries differ in many
ways. Even firms from the same home country
diverge in terms of capabilities, motives, internationalization stage, risk-taking, global scale, target
markets, entry modes, and other OFDI strategies.
SMNEs from emerging countries are still different
from SMNEs from advanced and newly industrialized economies concerning the home market’s
importance, size, and linkages as well as the home
country’s institutional complexity and its effect on
transnational activities.
Small firms, especially those who do not have
strong financial resources or who have not been
able to finance their capability shortfalls (Hennart,
2012), may not follow the springboard pathway.
While large EMNEs continue to grow rapidly, many
small- and medium-sized EMNEs who lack the scale
and scope advantages of the larger firms struggle to
establish competitive footholds in target countries.
The latter can be more evolutionary in their
internationalization process than the former. One
can posit too that EMNEs from China and India are
likely to be more ambidextrous, adaptable, and
amalgamable than those from Russia and Brazil.
Thus far, most research has looked at SMNEs
through the lens of M&As, while little attention has
been paid to other important investment modes
such as equity participation, co-development,
greenfield investments, cross-licensing, co-production, co-marketing, co-branding, and divestments.
Springboard is not a one-step act. Changing patterns, processes, and rationality in such areas as
entry mode, ownership level, partnerships, leadership, market development, subsidiary roles, and
intra-MNE orchestration are understudied. Dynamism associated with springboard strategies thus
warrants heightened attention. These issues motivate us to consider a typology or taxonomic
approach that can provide more insights into the
plurality and diversity of SMNEs. Scholars can
unpack each quadrant or group within the matrix
they study and then identify a peculiar set of
strategic or organizational traits for different types
and identities of such companies. Equally, a comparative approach that contrasts EMNEs with
AMNEs, compares different SMNEs from different
economies or industries, and even compares MNEs
who heavily springboard with those who do not
will be valuable to advance our understanding of
these firms.
Springboard is an important means to achieve
strategic gains. These gains, however, mandate
considerable orchestration in both design and
execution. Current research lacks specificity in the
orchestration process during and after the springboard act unfolds. While most SMNEs view their
home base as the lynchpin of success for their
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global operations, more attention should be paid to
the integration of operationally and geographically
dispersed activities within the firm and with other
players in the global business ecosystem. Expected
gains from amalgamation require an orchestration
system to underpin, while ambidexterity and
adaptability can nurture this system as it evolves.
Future research should answer important questions
such as how home–host links are established, how
these links differ from those in established AMNEs,
what effective mechanisms are employed by which
SMNEs orchestrate global operations, how strategic
assets they acquired are integrated into home base
operations, and how upgraded capabilities are
subsequently leveraged and deployed to further
spur their internationalization? Established AMNEs
can offer SMNEs, particularly those from emerging
economies, tremendous lessons regarding crossborder orchestration given the former’s long experience in this area but the latter should be vigilant
in finding their own effective, even creative, ways
in connecting, recombining, and reconfiguring key
resources throughout the organization. Following
this logic, research should explore how SMNEs use
their home base as a reservoir to absorb and
assimilate global resources, a testing ground for
business models and new products, and a launchpoint for their global reach of products. The
upward spiral concept we introduced remains an
important area for further exploration.
Digital globalization reduces the minimal scale
needed to go global, enabling small businesses and
entrepreneurs, especially those using digital or
online platforms, to leapfrog. This influences MNE
behavior in many ways, and nurtures springboard
strategically and organizationally. Digital platforms
(e.g., global e-commerce marketplaces, social media
platforms, specialized service platforms) provide
these small and new players with ‘‘plug-and-play’’
infrastructure and opportunities to put themselves
in front of a vast built-in global customer base.
Digital globalization thus provides a springboard
for these micro-MNEs or new MNEs to reach global
consumers, albeit not for the purpose of acquiring
strategic assets such as technologies or brands.
No MNE can be radical in everything at all times.
Future research should shed insights on when
SMNEs are apt to be more radical or risk-taking
and when they become more gradual or risk-averse
in their evolution. We submit that an SMNEs’
internationalization process would be an upward
spiral trajectory, being radical and accelerated in
their early-stage OFDI but their overall
Journal of International Business Studies
internationalization over a long horizon is still
evolutionary. This has created a need for future
research to decipher investment-related radical
moves (path departure) and operation-related
incremental moves (path dependent). MNEs act in
a springboard fashion but they are still learningdriven organizations, with competence such as
organizational learning, absorptive capacity, and
international experience being immensely important to them (Luo & Zhang, 2016). We should not
forget too that SMNEs from different countries
could learn from each other. They are often competitors but also collaborators in foreign markets.
Questions, such as what they can learn from the
success or failure of established emerging market
counterparts (e.g., those from South Korea, Singapore, and Israel) and what practices developed by
these counterparts in global capability catchup can
be followed, are of strong implications to both
theory and practice on SMNEs.
Although cultural and geographic distance are
supposed to be less significant for SMNEs because of
advances in global connectivity and these firms’
intent in strategic asset-seeking, the challenges
encountered by these firms in bridging cultural
divides between home and host country nationals
and the difficulty in recruiting qualified foreign
talent suggest that cultural distance still matters.
Future research on human resources and crosscultural management could unpack the challenges
these firms encounter in host countries both in the
entry execution as well as in the context of the
post-M&A phase. Comparative analysis can shed
light on whether such challenges are specific to
certain countries or regions or whether EMNEs in
general share the same concerns, and if so, why or
why not. Yildiz and Fey (2016), confirming Tung’s
study (1988), have shown that psychic distance
perceptions and their implications can indeed be
asymmetrical in cross-border M&As where investors from AMNEs to emerging markets typically
encounter less resistance vis-à-vis the other way
around. Alternatively, can the challenges encountered by SMNEs in this regard be a function of the
stage of internationalization, i.e., their relative
newness as foreign investors?
How can EMNEs win the war for talent in light of
brain circulation in and weak soft power of emerging
economies? This research question must look
beyond the current policies of host governments
(e.g., that of China and India, two of the largest
diasporas in the world) to appeal to the nationalistic
sentiments of members of their overseas diaspora to
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Yadong Luo and Rosalie L Tung
149
return home to contribute to development at home.
Research can build on the work by Tung and
Lazarova (2006) on the motivation of ex-host country nationals (or returnees) to return to their countries of origin and also in the context of the changing
nature of careers and the push and pull factors in
global mobility (Baruch, Altman & Tung, 2016).
Furthermore, how can countries build up their soft
power? As noted earlier, even though China currently spends an estimated $10 billion per annum to
improve its image on the world stage, its ranking has
edged up only very slightly. Since the soft power
index is composed of five dimensions – culture,
diplomacy, education, innovation, and government
– monetary investments alone may not accomplish
the desired objective (McClory, 2017). Finally, given
the geographic diversity of investments of SMNEs,
how can they effectively manage multicultural
teams (MCTs)? While there is abundant research
on MCTs that involve team members who are
nationals from BRICS countries (Stahl, Maznevski,
Voigt & Jonsen, 2010), there is a dearth of research
where the leaders of MCTs hail from an EMNE. There
are both positives and negatives associated with
MCTs (DiStefano & Maznevski, 2000) and the challenge for SMNEs is to harness the positives while
minimizing the negatives. Future research could
examine whether the dynamics in MCTs in published research apply to that in these new global
players as well.
The aforementioned agenda for future research is
not intended to be comprehensive. Rather, it suggests that the growing presence of SMNEs and their
forays into the world investment and economic
community present abundant research opportunities to further understand these fascinating phenomena. The springboard view, originally
developed a decade ago for EMNEs, can be extended
to a greater population of multinationals that act in a
springboard manner. Springboard act is a distinct
form of MNE behavior, the latter being at the center
of IB research over the past half a century. This article
represents an ongoing attempt to better understand
a greater diversity of MNE behavior in operationally
interconnected yet organizationally complex and
continuously evolving global competition.
ACKNOWLEDGEMENTS
The authors are grateful to Professor Alain Verbeke and
the two anonymous reviewers for their valuable
comments and suggestions.
NOTES
1
The 11 journals we surveyed include 6 major IB
journals (JIBS, JWB, GSJ, MIR, J. of Int’l Management,
IBR) and 5 top management journals in UTD list
including AMJ, ASQ, AMR, SMJ, and Org. Science.
2
Since the publication of our springboard article in
2007, the ‘‘goldilocks’’ debate took place as well (see
Cuervo-Cazurra, 2012; Verbeke & Kano, 2015), which
itself showcases a new interest in better understanding
how EMNEs may challenge or extend existing ideas
given the particularities of these countries and their
firms. This debate involves whether or not EMNEs are a
new phenomenon that warrants new or extended
theoretical perspectives.
3
Research demonstrates that AMNEs, US and European firms included, expand abroad to source unique
knowledge, for ‘‘catching up’’ with competitors
(Cantwell, 1989; Kuemmerle, 1999), obtaining ‘‘technical diversity’’ (Cantwell & Janne, 1999), and springboarding to reduce their next-generation R&D costs
(Chung & Yeaple, 2008).
4
The LLL framework has been criticized for missing
one crucial issue: it does not explain how firms that are
going abroad to learn can, at the same time, successfully compete with their teachers (see Lessard & Lucea,
2009; Ramamurti, 2009).
5
Other IB theories that can be compared with the
springboard perspective if space permits include perspectives such as international new ventures (INVs),
born-global firms, global latecomers and catchup,
liability of emergingness, government and MNEs, as
well as strategic resilience for international business.
6
For example, Cemex developed a rigorous system
for managing and integrating acquisitions by relying
on its strengths in standardized procedures and
information technology, while Infosys designed a
unique knowledge management system to serve as a
boundary-spanning tool within the network promoting knowledge sharing and interaction, while also
allowing private knowledge to be generated (Garud,
Kumaraswamy, & Sambamurthy, 2006). Haier’s success is due not only to their expansion in developed
markets and obtaining access to valuable strategic
assets, but also to its home-centered capability
upgrading that combines foreign technologies it
acquired with its own innovation in product features
and customization.
7
The resignation of two American executives,
Stephen Ward and William Amelio, as Lenovo Group’s
President and CEO and replacement by a Chinese CEO
within a relatively short time after their much publicized acquisition of IBM PC division, highlights the
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challenges that Chinese MNEs can encounter in
retaining local talent.
8
In the 2015 ‘‘Soft power 30’’ index, China was
ranked at the very bottom despite its huge spending
(an estimated $10 billion per annum) to build up its
soft power. In 2017, China moved up to 25th rank,
respectively (McClory, 2017). For comparison, Brazil
and Russia ranked 26th and 29th, respectively. India
and South Africa were not ranked.
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ABOUT THE AUTHORS
Yadong Luo is the Emery M. Findley Distinguished
Chair and Professor of Management at University
of Miami. His research interests include global
corporate strategy, global competition and cooperation, and business and management in emerging
economies, among others.
Rosalie L Tung is a chaired Professor of International Business at Simon Fraser University. She is a
past President of the Academy of Management and
the Academy of International Business, and an
elected Fellow of the Royal Society of Canada, the
Academy of Management, and the Academy of
International Business. She has published extensively on the subject of international management.
Accepted by Alain Verbeke, Editor-in-Chief, 1 September 2017. This article has been with the authors for two revisions and was single-blind
reviewed.
Journal of International Business Studies
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