In today’s global market, the opinion that general managers should know numerous important details concerning creating a sustainable superior performance in emergent economies appears to be more and more important. The following paper explores various ways and strategies allowing general managers to create a better economic situation and to achieve better results in emergent economies. Generally, the main finding of recent research is in the importance of applying a new strategy in the functioning of emergent economies including internationalization of local enterprises, foreign investment, economic liberalization, the transfer of progressive technologies, and strategic orientation.
First of all, speaking about the information which is to be known and implicated by general managers in emergent economies, the issue of local enterprises’ internationalization should be considered. According to Kumar, “the recent corporate evolution of emerging economies has been characterized by increased internationalization of firms in the form of outward foreign direct investment” (2007, p. 15). The quest for global internationalization taking place in emergent economies nowadays is ever more increasing. Thus, the managers are to acquire deep knowledge in this area to become successful participators in this phenomenon making their contribution to it.
Next, general managers should know and understand how foreign investment can be attracted to any particular country with an emergent economy, and how it can be used in the best way possible. Aulakh (2007) argues that foreign investment is by far the most important source for developing emergent economies as local financial assets are scarce and mainly directed to social needs, but not on the development of an economy. Thus, the author offers to develop the most diversified strategies aimed to attract foreign investment to emergent economies (Aulakh 2007). In addition, according to IMF (2010), “in the past fifteen years, FDI has been the dominant form of capital flow in the global economy, even for developing countries”. However, there also exist several specialists denying the use of foreign financial investment as harming emergent economies, making them dependent and causing an economical crisis within them. With regards to this, general managers should develop their understanding of this matter, and apply it during their interaction with foreign investment. Still, according to Dunning (1993, 87), “the experience of the South East Asian economies with FDI tells us that it can be extremely useful for emerging economies if it is used strategically”.
Further, the important maxim that general managers are to know well and to expand their knowledge is using economic liberalization as it is the primary engine of growth (Luo 2001). According to Nunnenkamp (2001, p.1047), economic liberalization became the power that enabled launching “proactive programs to improve the environmental and social performance of products, processes, services, and facilities” produced in the countries with the emerging economy.
In addition, creating a sustainable superior performance in emergent economies is closely connected to the transfer of progressive technologies from the countries with advanced economies and, thus, pursues progress towards convergence between developed economies and the developing ones in terms of economical development and the improvements of the standards of living (Lipsey 2000). The application of such technologies along with the participation of foreign investment in the development of the emergent economy is crucial for the success in the countries of the third world. This tendency can be well explored in the example of China with its ever more growing economy achieving unbelievable results during the last decades (Nunnenkamp 2002). What is also important with regards to the implementation of foreign technologies within emergent economies, is the fact that they contribute to the lessening of the amounts of needed foreign investment capital. This, in turn, is also crucial for such economies as they do not have to be overweighed with the constant payment of ever-growing percents on credit provision (IMF 2010).
Finally, according to Aulakh (2007, p. 287), “strategic orientation helps build dynamic capability and its contingencies in emerging economy”. Thus, general managers are to acquire a vast piece of knowledge on strategic orientation maxims and to learn how to apply them in practice at every stage of the economical process. In addition, “surveys of numerous firms indicate that strategic orientations are important drivers of adaptive capability and are key elements of dynamic capabilities” (Kumar 2007, p. 89).
In conclusion, the examining of a variety of sources on the facts that general managers should know about creating a sustainable superior performance in emergent economies shows the following picture: the most important factors for emergent economies are enterprises’ internationalization, foreign investment, economic liberalization, the transfer of progressive technologies, and strategic orientation. The knowledge of the above-mentioned factors would undoubtedly help general managers in their orienting in the situation of emergent economies. Among these factors, foreign investment is by far the most important source for developing emergent economies as local financial assets are scarce and mainly directed to social needs, but not on the development of the economy. With regards to this fact, general managers need to develop their knowledge on foreign investment attraction and proper operation.
References
- Aulakh, P, 2007, “Special issue on emerging market multinationals from developing economies: motivations, paths and performance”, Journal of International Management, 13(3): 235-402.
- Dunning, J, 1993, Multinational Enterprises and the Global Economy. Wokingham, The United Kingdom.
- IMF, 2010, International Financial Statistics Yearbook. Washington, D.C.
- Kumar, N, 2007, Emerging TNCs: trends, patterns and determinants of outward FDI by Indian enterprises. Transnational Corporations, 16(1): 1-26.
- Lipsey, R, 2000, “Inward FDI and Economic Growth in Developing Countries”, Transnational Corporations 9 (1): 67–95.
- Luo, Y, 2001, “Determinants of entry in an emerging economy: a multilevel approach”, Journal of Management Studies, 38: 443-472.
- Nunnenkamp, P, 2002, “FDI and Economic Growth in developing Countries”, Journal of World Investment, vol 3: 657–677.
- Nunnenkamp, P, 2001, “European FDI Strategies in Mercosur Countries”. Institute of World Economics, Kiel Working Papers 1047, Kiel.