COST Action IS0905 Emergence of Southern Multinationals and their

Impact on Europe COST İstanbul Meeting

May 24-25, 2011

• This research is funded by the Turkish Scientific and Research

Council since August 2010 as part of COST Action IS0905

Introduction The world trade started to be

influenced by different dynamics: the increasing influence of

Emerging Markets in the world trade:

Big 10 Emerging Markets China, India, Indonesia,

South Korea, Poland, Turkey, Brazil, Mexico, Argentina and South Africa

The importance of Turkey in the new era of internationalizationTurkey as a

developing country, accomplished a major increase in its OFDI to developed countries, especially after 2005.

The importance of Turkey in the new era of internationalization

Turkey’s OFDIreaching to $1.6 billion in 2009, held the 45th place in OFDI rankings.listed 3rd country in the region(the West Asian

countries)

New greenfield projects:Turkey was 25th country with 153 projects in

2009 (YASED, 2010).

Focus in The Literature

The micro level studies from International Management perspective in the literature mainly focus on 1. Underlying Motives of OFDI2. The impact of FDI Motives on DOI3. The role of Firm capabilities and resources

as drives of OFDI4. The role of Competitive strategies in OFDI

activities of the companies

The Rationale and Motives Behind Outward FDI

Deng (2003), uses Dunning’s OLI framework and identifies 5 Firm-specific internal motives :

resource seeking, market seeking, diversification seeking, technology seeking and strategic asset seeking motives

“institution based view”:home country related

factorshost country

environment related factors

“resource-based view”resource seeking and

asset seeking motives

Schüler-Zhou and Schüller (2009)

tangible (technology,machine)

intangible resources (management know-how, R&D capabilities, internationally known brands, brand development ability etc.)

The findings of recent studies on EMNCs:

“strategic

asset seeking” motives

and/or

“technology based resource seeking’’ motives

acquiring advance technologyenhancing managerial and

marketing skillsaccessing know-howhaving the reputation for being

established in a prestigious market

increasing brand familiarityacquiring well-known

international brands innovation, design, branding

and acquisition of technology

SOME MARKETING STRATEGIES AND

ACTIONS ARE HIDDEN MOTIVES

Marketing related factor as a single element within other groupings trademark and brand image (Kaya and Erden, 2008)

speed of responding to consumer demand as firm characteristics (Kaya and Erden, 2008)

branding as firm characteristics (Eren-Erdogmus et al., 2010)

company’s marketing sophistication within improved organizational performance (Khavul et al., 2010)

reputation and product design within perceptual performance measures (Kaya and Erden, 2007)

taking market orientation as an independent variable while measuring subsidiary performance (Kwon , 2010).

Rationale of the research1. Marketing related factors as EMNCs’ OFDI motives were

investigated as part of different sub-groupings.

2. Most common measures used for internationalization range from combination of basic ratios such as;

Foreign Sales to Total Sales Foreign Assets to Total Assets Share of foreign subsidiaries to total subsidiaries,

- mostly objective /metric factors with some methodological difficulties

- consideration of subjective factors can bring some benefits for

the interpretation.

Rationale of The Research3. Competitive strategies , managerial and

organizational capabilities and sources of the companies are mainly investigated as the drives of OFDI, mostly taken as antecedents rather than consequencies.

Internationalization through FDI influences

the performance of the companies in general , marketing performance in particular in terms of these dimensions

Rationale of The Research4. In the International Marketing Literature,

the majority of studies focus on export as a market entry mode and analyse;Export marketing strategiesThe interaction between marketing strategies and export

performance as an an indicator of internationalization

Very limited studies on FDI as either an entry mode

or indicator of internationalization

Objectives of The StudyThe basic objectives of the study are;

1)to determine the role of underlying marketing related motives of Turkish Multinationals investing in EU,

2)to analyze the impact of these motives on both the types of FDI and DOI in the light of company and industry characteristics

3) to examine the affect of FDI types and DOI on perceived company performance in general, marketing performance in particular

1) conducted via 10 in-depth interviews to identify Turkey specific marketing related factors, if any

2)

to be conducted with Turkish companies having OFDI into EU countries, analyzing the results with the help of SPSS3)

to interpret the analytical results, to be obtained in Phase 2, if needed.

Qualitative study (Oct ‘10-Jan ‘11)

Quantitative study(March ‘11 – Nov ’11)

Further in-depth interviews(April ‘12?)

Research Methodology

Common Points with the Lit.Similar to other country MNCs

finding new markets, gaining experience in new markets, having company growth, introducing new products, getting a larger market share,having international brands,entering new business areas,having cash flow,turning extra cash into investments,diluting the risk,decreasing freight costs,accessing low cost resources.

1. In Relation to “Buying Time” in the Internationalization Process

2. In Relation to New Product Development

3. In Relation to the Effects of Manufacturing Country of Origin

4. In Relation to the Effect of Communication

5. In Relation to Targeting the Turkish Population in Europe as a Niche Market

Qualitative Findings – Some Specific Factors

Through acquisitions, they had access to tangible and

intangible assets - buying an entire knowledge system under a

unified control, [Lau et al., 2010, Deng, 2007)]

The tip of the iceberg: Turkish MNCs investing in Eastern EU

for cost cutting concerns

Hidden chunk: “manufacturing country of origin”

The rise of communication’s effect and niche targets in EU

Conclusions

COST Action IS0905 Emergence of Southern Multinationals and their

Impact on Europe COST İstanbul Meeting

May 24-25, 2011

• This research is funded by the Turkish Scientific and Research

Council since August 2010 as part of COST Action IS0905