Technology Acquisition and Innovation Strategies in the Internationalization Process of Enterprises in Emerging Market

Abstract

Emerging market firms often make the acquisition of technology the focus of their main internationalisation strategy, creating a kind of "reverse internationalisation" pattern which both adds to and poses challenges to the standard multinational firm theories based on monopoly rents. Cross-border M&A, strategic partnerships and the establishment of overseas R&D facilities are identified as the main channels for emerging market firms to source the critical external technologies. However, the success of technology transfer is largely dependent on the firms' following innovation policy. Emerging market firms must go through a process of capability building to absorb and incorporate the technologies, market-driven incremental innovation and finally, independent innovation so that they can improve their status in the global value chain. The systematic study of this process provides a coherent framework for understanding the international expansion of firms from emerging economies, and provides useful practical guidance for corporate strategic planning. It also has important implications for the policymakers, investors and managers who are in charge of or helping to oversee such cross-border technological upgrading processes globally.