Execution Challenges: The Experiences of Emerging Economy Multi-Nationals.

The emergence, and rise, in recent years of multinational companies (MNCs), from emerging economies such as Brazil, India and China in developed country markets especially in the US and Western Europe, is well documented in the business and popular press as their numbers in the Fortune Global 500 list have increased over time. While their globalization has been documented, and the challenges of companies seeking to expand into emerging markets have also been discussed in detail, the unique execution challenges these Emerging Economy MNCs (EE-MNCs) have had to overcome in their journey of globalization have received less attention. Our paper is a small exploratory step in this direction. Our focus in this paper is to develop a conceptual framework for organizing the unique features of the strategy execution challenges faced by companies as they look to expand. EE-MNCs face certain unique challenges in execution as compared to MNCs from developed countries. In the first place, EE-MNCs typically trail global competitors in intellectual capital, reputational capital, human capital and social capital and, sometimes, in financial capital. Two, because of these deficits, EE-MNCs suffer from competitive disadvantages in key areas such as technology and products, brands, distribution access, and knowledge of global markets relative to their rivals from developed countries even as they try to compete globally. EE-MNCs, thus, have to simultaneously compensate for their deficiencies in several parts of their value chain even as they try to manage within substantial resource constraints. It is this imperative to walk a tight rope between the need to expend resources to expand capabilities and the need to stay within resource constraints that leads to the complex execution challenges faced by EE-MNCs. In this exploratory effort, we use an inductive methodology to build a grounded theory of the execution challenges faced by EE-MNCs. Based on case studies (published and unpublished, based on both primary and secondary data sources) and interviews and conversations with key managers on the process of globalization followed by EE-MNCs from Brazil, India and China, we identified the major execution challenges they faced, focusing especially on how these challenges were different from the challenges that all companies face when they globalize. We identify the primary execution challenges faced by the EE-MNCs along the following dimensions: 1) Distributing and then integrating selective value activities across the company's global value chain; 2) Developing new capabilities and resources in new markets; 3) Realigning resource deployment priorities; 4) Differentiating and integrating selectively management across borders; 5) Creating a coherent "single-firm" governance model; 6) Overcoming internal and external biases. How well they cope with these challenges is the key to how successful EE-MNCs are in their quest for globalization. We provide specific examples from the globalization efforts of many EE-MNCs as we develop and discuss the framework. [ABSTRACT FROM AUTHOR]