Linkage, Leverage & Learning

http://www.fiec.espol.edu.ec/aefiec/Cetec

Main Question How do some firms challenge established positions in the global economy, and displace incumbents, some of them highly advanced and fiercely competitive especially when the challengers start small, lack key resources, and are distant from major markets? (Mathews, 2006) http://www.davidjurasek.com/makingbestdecisions.htm

Firms from the Asia-Pacific region (or from peripheral areas) that have successfully internationalized and in some cases become Industry leaders.

Start from behind, and overcome their deficiencies, in sometimes short periods of time, without any of the advantages of the incumbent industry leaders.

They do so without initial resources, skills, knowledge, proximity to major markets, and without the (skilled) social capital.

Succeed turning initial disadvantages into sources of advantage. For example, through partnerships and joint ventures.

Dragon Multinationals http://www.thesundaytimes.co.uk/sto/busines

s/Industry/article615612.ece

(Mathews, 2006).

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• Success was due to difficulties encountered at home and to incentives driving interna- tionalization (Mathwes, 2006).

• “pre-globalization”” success cases, when international investment flows were still rudimentary (Mathwes, 2006) .

• “ less driven by cost factors[…]but more by a search for markets and technological innovations to compete successfully in the global economy(Yeung, 2000)”

• Latecomers that utilized pull factors and connections to accelerate their internationalization.

1st Wave 2nd Wave MNEs from the developing world

(Mathwes, 2006)

New “Zoology” Latecomers: countries and firms that arrive late on the industrial scene (Mathews, 2006)

These firms are the latecomers and the outsiders that have now become global giants themselves -the “Dragon Multinationals (Mathews, 2002a).

firms from the developing world are becoming players in the global economy and that they have lessons to teach in the strategies they have adopted (Mathews, 2004; Bartlett and Ghoshal, 2000; Sinha, 2005)

http://omgtoptens.com/misc/10-most-common-reason-why-people-are-fired-from-job/

• “Latecomers and newcomers do not start out in a cautious way. They tend to see a highly integrated world as their market” (Mathews, 2006).

• Collaborative Strategies are most likely to succeed and are to be pursued by firms which lack substantial prior resource (Mathews, 2006).

www.asmarterplanet.com/

http://asmarterplanet.com/files/2011/07/World_FlightLines_BioDiaspora-1024x670.jpg

Latecomers & Newcomers: Distinctive characteristics

•Accelerated Internationalization •Organizational Innovation •Strategic Innovation

http://onlyhdwallpapers.com (Mathews, 2006)

The international economy is inhabited by few giants, and mostly by a large number of SMEs which are interna- tionally active shaping the global market.

Later and Newcomer s Impact

(Mathews, 2006) www.consultingvp.blogspot.com

http://consultingvp.blogspot.com/2010/11/12-cs-for-team-building.html

http://javiersole.com/?p=1328

“They are not simply occupying space vacated by incumbents, In many cases they are creating new economic space … Indeed the Dragon Multinationals help to expose the weaknesses and limits to traditional accounts of MNEs and to existing theories and frameworks of IB”

(Mathews, 2006).

Later and Newcomer s Impact

Latecomers-Newcomers & Existing Framewoks

there is a need to have another approach to IB, as the existing ones apply only to Incumbent firms (“typical MNE’s”).

RBV LLLThe incumbents newcomers and latecomers

see the world as full of competitors who are trying to imitate their

success.

See the world as full of resources to be tapped,

provided the appropriate complementary strategies and

organizational forms can be devised.

evaluate resources in terms of their

inimitability and non-

evaluate resources in terms of their imitability and

transferability

(Mathews, 2006)

OLI LLLThe incumbents newcomers and latecomers

MNEs as deriv ing advantages from their superior resources that

theyexploit abroad.

seeking ways to access needed resources prec isely

through l inking up with source firms abroad, and

international iz ing in order to access the resources that

they lack.

(Mathews, 2006)

Internationalization Pull Process Push

Process Multiple

Connections of the Global Economy

“the process of the

firm’s becoming integrated in international

economic activities.” (Mathews, 2006)

An alternative and complementary framework grounded in globalization: LLL

Linkage, Leverage &

Learning

Linkage • As latecomers and

newcomers expand seeking resources (otherwise not available), collaborative forms of integration constitute overwhelming options when accessing external markets.

• Through linkage, the latecomer firm can tap its links with more advanced firms to acquire knowledge, technology, and market access. (Mathews, 2006).

http://www.campusrn.com/network

http://www.ewp.eu/about-ewp/partnership/

Leverage • Refers to the ways that

links can be established with incumbents or part- ners so that resources can be leveraged.

• Capacity to secure more from a relationship than the firm puts in it.

(Mathews, 2006)

http://thoughtleadershipleverage.com/2011/09/leveraging-your-book-and-platform-strategically/

www.lma-consultinggroup.com

www.thoughtleadershipleverage.com

http://www.lma-consultinggroup.com/blog/?tag=erp

Learning Repeated application of linkage and leverage processes may result in the firm learning to perform such operations more effectively (organiza-tional learning).

http://ifal.org.uk/action-learning/

www.ifal.org.uk

(Mathews, 2006)

Features of the pattern of accelerated expansion by linkage and leverage

• linkage and leverage facilitates accelerated international expansion.

• Linkage and leverage is well adapted to the interlinked character of the global economy.

• Linkage and leverage fits the needs of firms lacking initial resources.

(Mathews, 2006)

Author’s concluding thesis • it is the changing global environment that has

speeded up the appearance of newcomers and latecomers, and that has provided opportunities for expansion and penetration for firms that can take advantage of, and complement, the weblike character of the multiple networks of the global economy

(Mathews, 2006)

• “the picture I have developed is one of the global incumbents struggling to keep up with a fast-changing world economy where they are being outwitted by the more nimble newcomers and latecomers”(Mathews, 2006)

• ”The international economy is thus likely to become the source of endless novelty and innovation, creating new opportunities but also creating pressures on incumbents to adapt or die”.

(Mathews, 2006)

http://themoral.com/if-she-can-write-a-thank-you-note-you-can-too/

Sources • Bio.Diaspora Project. (2012). The global airline transportation network visualized by the flight pathways of all commercial flights

worldwide [Photo]. Retreived from http://asmarterplanet.com/files/2011/07/World_FlightLines_BioDiaspora-1024x670.jpg

• [Building] Retrieved from http://consultingvp.blogspot.com/2010/11/12-cs-for-team-building.html

• CampusRN (2013). [Image]. Retrieved from http://www.campusrn.com/network

• Ewp (2013). Cooperation. [Image]. Retrieved from http://www.ewp.eu/about-ewp/partnership/

• Flakes, K. Girl grimace pretty [Photo]. Retreived from http://www.photoxpress.com/photos-girl-grimace-pretty-20528950

• [Learning]. Retrieved from http://ifal.org.uk/wp/wp-content/uploads/2012/04/illustration1full.jpg

• [Leverage]. Retrieved from http://www.lma-consultinggroup.com/blog/wp-content/uploads/2011/03/Leverage.jpg

• [Leverage]. Retrieved from http://thoughtleadershipleverage.com/2011/09/leveraging-your-book-and-platform-strategically/

• Mathews, J. (2006). Dragon multinationals: New players in 21st century globalization. Asia Pacific Journal of Management, 5-27.

• Mathews, J. A. (2006). Catch-up Strategies and the Latecomer Effect in Industrial Development. New Political Economy, 313-335.

• Mathews, J. A. (2007). Latercomer Strategies for Catching Up: Linkage, Leverage and Learning. Development Outreach, 24-27.

• MGSM . John Mathews. [Photo]. Retrieved from http://www.mgsm.edu.au/research-and-faculty/faculty/professor-john-mathews/

• Omgtoptens.com (2012). The Late Comers [Photo]. Retreived from http://omgtoptens.com/misc/10-most-common-reason-why-people-are-fired-from-job/

• onlyhdwallpapers.com (2011). Bulbs [Image]. Retreived from http://onlyhdwallpapers.com

• [Thank you Note]. Retrieved from http://themoral.com/if-she-can-write-a-thank-you-note-you-can-too/

• The Sunny Times (2011). China is racing to become a competitor in high-tech sectors [Image]. Retreived from http://www.thesundaytimes.co.uk/sto/business/Industry/article615612.ece

• [Working Team]. (2012). Retrieved from http://javiersole.com/wp-content/uploads/2012/10/Working-Team-III.jpg