Outward investment from emerging markets: time for a paradigm shift?

This chapter is a Kuhnian analysis of the literature on outward investment by Emerging Economy Multinationals (EMNE). Starting from the canonical model of internationalisation based on the Firm and Country specific advantages framework, the chapter shows that overtime the anomalies introduced by the new phenomenon of EMNES have been integrated within the dominant framework. By broadening the notion of firm-specific advantages and exploring the role of escape from country specific disadvantages, the canonical model still explains EMNE internationalisation. Other contemporaneous factors that may have played a role in outward investment such as improved terms of trade, role of buoyant financial markets and millionaire migration are omitted from the analysis of EMNE outward investment and so the role of firm and country specific advantages and disadvantages may correspondingly be overstated. The chapter concludes that it is time for a paradigm shift and a real options framework that builds on particular features of EMNE may offer a better understanding and synthesis of both DMNE and EMNE internationalisation.