IB 225: Understanding the Global Business Environment
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1. The topic of this entire course is understanding the global business environment. There are
both proponent and critics of international business/globalization. Please explain both sides
of the argument and give your final opinion on whether international business helps or hurts
2. One the most notorious failed international mergers in history is that of Daimler (Germany)
with Chrysler (United States). Please read the attachedWall Street Journal article
“DaimlerChrysler: The Divorce” and, given what you learned in chapter 4 about how
differences in culture affect international business, please explain why you think this merger
was a failure. You should use outside sources to support your claims.
3. Summarize the following articles (about 1.5 pages each) discussing topics discussed during
the duration of the course. The article can be downloaded using Milner Library online
a. Ensign et al. “BlackBerry in Red China: Research in Motion Navigates Institutional
Barriers in an Emerging Market.” Thunderbird International Business Review, 2008,
b. Luo and Rui. “An Ambidexterity Perspective towards Multinational Enterprises
from Emerging Economies.” Academy of Management Perspectives, 2009, 23(4): 49-70.
4. Self-reflection Essay: explain how you would use in your future international business career
two concepts learned in this class. Devote at least 2 paragraphs for each concept. Don’t
forget to explain the concepts first (one paragraph max. for explaining each concept). Cite
page numbers of the textbook where the concepts are highlighted or discussed.
To answer this question think like a senior manager. Specifically, focus on your long-term
career and not just immediate job assignment upon graduation.
Dr. Trimble, May 2019
Page limit: 25 pages, 1.5-spaced, 11 point Times New Roman font.
The cover page of the submission should include course number, “IB 225: Capstone Assignment”
and your first and last name. The second page should be the table of contents. The last page should
be the reference page.
Please also note:
1. This is an individual assignment. Collaborative work is easily detectable and will result in
all parties failing the course.
2. There is no need for typing out the questions, only the solutions.
3. No figures, charts, tables etc. are required for his assignment, but they can be used to
illustrate your points.
4. Your answers should be numbered clearly. Major concepts included in the solution can
identified via bold, underline, highlighting, etc.
5. Correct grammar and concise business writing will be factored into your assignment grade.
Luo and Rui
An Ambidexterity Perspective Toward Multinational
Enterprises From Emerging Economies
by Yadong Luo and Huaichuan Rui
In this article we present an ambidexterity perspective on the international expansion of emerging
economy enterprises, highlighting the unique strategic behavior of emerging market multinational enterprises (EM MNEs). Specifically, we conceptualize ambidexterity as a multidimensional term comprising
co-evolution, co-competence, co-opetition, and co-orientation. While all firms need and maintain some
degree of ambidexterity, EM MNEs have stronger motives and abilities to build and leverage such
ambidexterity to offset their late-mover disadvantages. They behave co-evolutionarily to deal with the
external environment they face at home and abroad, leverage their co-competence (transactional and
relational) to compete against their global rivals, develop co-opetitive (simultaneous cooperation and
competition) ties with their business stakeholders, and maintain co-orientations (leveraging competitive
advantages to bolster short-term survival and compensating competitive disadvantages for long-term
growth). This article uses several cases from China to detail this view and provides theoretical and practical
implications of ambidexterity in the context of global business. It sets a foundation for discussion and
examination of the critical domain of multinational enterprises from emerging economies— one that is yet
to be widely examined.
nterprises from emerging markets and developing countries have been increasingly active in
outward foreign direct investment (OFDI). According to the World Investment Report (2008,
pp. 37, 208), OFDI by emerging and developing
economies reached $304 billion in 2007, while its
stock exceeded $1.4 trillion, or 11% of the world
total, by the end of 2007 (compared to $20 billion,
or 1%, in 1990). This results in many new multinational enterprises (MNEs) whose business attributes, dominant motivations, evolutionary trajectory, and strategic behaviors contrast with
The authors would like to thank the two editors, Professors Chung
Ming Lau and Garry Bruton, and anonymous reviewers of AMP for their
those of older (North American, European, and
Japanese) MNEs. Accordingly, there has been
considerable research examining the uniqueness
of emerging market multinational enterprises (EM
MNEs) from various perspectives. For instance,
Luo and Tung (2007) and Mathews (2002) delivered the springboard view, depicting international
expansion as a compensatory response to EM
MNEs’ late-mover position on the global stage.
Child and Rodriguez (2005) and Rui and Yip
(2008) developed the strategic intent view, suggesting that outward investment by EM MNEs is a
proactive pursuit in search of strategic assets that
redress their competence deficiencies. Cuervo-Cazurra and Genc (2008), along with Witt and
* Yadong Luo (email@example.com) is Professor of Management and Emery M. Findley Jr. Distinguished Chair in the Department of
Management, School of Business Administration, University of Miami.
Huaichuan Rui (firstname.lastname@example.org) is Senior Lecturer in Strategy and International Business in the School of Management, Royal
Holloway, University of London.
Copyright by the Academy of Management; all rights reserved. Contents may not be copied, e-mailed, posted to a listserv, or otherwise transmitted without the copyright holder’s express written
permission. Users may print, download, or e-mail articles for individual use only.
Academy of Management Perspectives
Lewin (2007) and Yamakawa, Peng, and Deeds
(2008), unveiled the institutional escapism notion,
postulating that EM MNEs go global to avoid poor
institutional environments at home. Finally, Deng
(2004) and the United Nations’ World Investment Report (2006) offered the government steward logic, arguing that outward investment is a
political mandate for EM MNEs to acquire scarce
natural resources needed for economic and social
development of their home countries.
Each of these views has merits and insights, and
each has limitations to its applicability. For example,
the government steward logic holds true for many
state-owned EM MNEs but may not be true for
private or entrepreneurial enterprises seeking international growth. The institutional escapism view is
plausible for those businesses that are clearly exposed
to institutional constraints at home. Not every business is equally affected by the same institutional
environment, and those subject to less hindrance
from this type of environment may not fit the escapism assumption. In addition, while these perspectives shed more light on why EM MNEs go global,
they give little indication of how well companies
will succeed when investing and operating overseas.
A more overarching perspective addressing not
merely “why go global” but “how to succeed” seems
necessary to advance the research on internationalization of emerging economy enterprises (Lau &
We supply such a perspective based on “ambidexterity”—viewing EM MNEs as ambidextrous
organizations pursuing simultaneous fulfillment of
two disparate, and sometimes seemingly conflicting, objectives. This article formalizes this new
perspective and demonstrates its application using
several case studies. We suggest that EM MNEs’
ambidexterity has at least four dimensions or properties: co-orientation, co-competence, co-opetition, and co-evolution. Each “co” entails two
distinct or contrasting elements that occur simultaneously for a given EM MNE.
Co-orientation means that EM MNEs simultaneously seek short-term survival and long-term
growth in a balanced manner. In doing so, they need
to leverage their existing competitive advantages for
short-term survival and reasonably rapid returns on
investment while acquiring assets that promote
longer term growth, organizational scalability, and
resilience to external shocks. These assets are technological (e.g., patents), intellectual property (e.g.,
brands), operational (e.g., labor skills and local
knowledge), and organizational (e.g., experience).
They can be acquired from longer established companies or developed internally.
Co-competence means that EM MNEs deploy,
exploit, and utilize both transactional (marketbased) and relational (network-based) capabilities
as they navigate and operate internationally. Possession and exploitation of relational capability is
generally more salient or significant for EM MNEs
than for advanced country MNEs.
Co-opetition denotes the situation in which EM
MNEs simultaneously compete and cooperate
with their international business stakeholders
(such as rivals, partners, suppliers, distributors,
and home and host country governments). This
enables them to benefit from collaborative competitive advantages and use them to overcome the
constraints of foreignness and lateness.
Finally, co-evolution occurs when EM MNEs
simultaneously respond to and actively influence
the external (especially institutional) environment they face in both home and host countries.
Thus, co-evolution emphasizes both compliance/
adaptation to external constraints and influence/
change over those constraints as ways for firms to
deal with the external conditions.
Our model here captures the ambidextrous
property of EM MNEs’ motivation, orientation,
capability, and context.
An Ambidexterity View of EM MNEs
What Is Ambidexterity?
ince Duncan (1976) coined the term “organizational ambidexterity,” research on the topic
has spanned several disciplines, including organizational learning (e.g., simultaneously pursuing double-loop and single-loop learning,1 organizational design (e.g., efficiency and flexibility),
Single-loop learning emphasizes the detection and correction of
errors within a given set of governing variables and is linked to incremental
change in organizations. Double-loop learning involves interrogating the
governing variables themselves and often involves radical changes such as
the wholesale revision of systems, alterations in strategy and so on.
Luo and Rui
and technological innovation (e.g., incremental
and radical innovation). The term is currently
taking shape as a research paradigm in organizational theory but still suffers some limitations.
Ambidexterity is currently defined rather narrowly: “to be aligned and efficient in the management
of today’s business demands while simultaneously
adaptive to changes in the environment” (Duncan, 1976; Gibson & Birkinshaw, 2004; Tushman
& O’Reilly, 1996). Conceptualization of ambidexterity in every field has treated it as a single rather
than multidimensional concept, neglecting its
richness and limiting understanding and application. Our first task is to extend this definition.
Organizations face both trade-off (either/or)
and ambidextrous (both/and) decisions. Ambidexterity is distinguished from trade-offs in emphasizing the simultaneous fulfillment of two disparate (and sometimes competing) ends rather
than forcing a selection between two alternatives (Eisenhardt & Martin, 2000; Gavetti &
Levinthal, 2000; March, 1991; Raisch & Birkinshaw, 2008). Organizational ambidexterity often
deals with a firm’s ability to pursue two disparate
things at the same time, such as exploitation and
exploration, efficiency and flexibility, low cost
and customer responsiveness, global integration
and local responsiveness, stability and adaptability, and short-term profit and long-term growth.
These features are applicable in the context of
international business. For EM MNEs, we conceptualize ambidexterity as a multidimensional property. Co-orientation is the temporal dimension of
ambidexterity, co-competence is the within-organizational capability dimension, co-opetition is
the stakeholder dimension, and co-evolution is
the contextual dimension. Collectively, these four
dimensions comprise a new perspective on why
and how emerging market enterprises expand internationally. Despite differing individual foci, the
four dimensions are integrated so that they (a)
interact and reinforce one another, (b) share some
multilevel, common antecedents that determine
the form or level of the four dimensions, and (c)
jointly and interactively influence the firm’s
global success and growth. The four dimensions of
ambidexterity are detailed later in this paper.
Why We Need the Ambidexterity View
Facing an unprecedented competitive environment, EM MNEs have become more ambidextrous. In the quest to survive and compete more
effectively against global rivals, EM MNEs need
not only to possess certain operational advantages,
as conventional MNE theory suggests, but also to
embrace a learning mentality and flexible strategic options (Child & Rodriguez, 2005). Ambidexterity is particularly consistent with the cultural,
institutional, and economic conditions facing EM
MNEs. Culturally, many emerging economies
have a long tradition of upholding harmony (e.g.,
East Asian yin-yang philosophy) and valuing interpersonal and interorganizational relationships
for business transactions (Hoskisson, Eden, Lau, &
Wright, 2000; Peng & Luo, 2000; Yiu, Lau, &
Bruton, 2007). Due to frequently weak legal protection and limited property rights, and the absence of large well-regulated markets, business enterprises in many emerging economies have to rely
on such relationships to gain access to resources or
markets (Meyer, 2004). In these conditions business and environment need to co-evolve and coadapt, aiming to achieve not merely short-term
returns but long-term growth. Business relationships with external stakeholders (e.g., rivals, suppliers, governments) must in these conditions be
both competitive and collaborative, requiring an
ambidextrous balance between the two. In addition, EM MNEs are better prepared than Western
MNEs and dragon multinationals to adapt to and
operate in institutionally “difficult” environments
both at home and abroad. This strength arises
from their ambidextrous approach (i.e., balancing
the short- and long-term goals of international
expansion) to dealing with the external environment in a host country. For firms with a long
history of operating in less developed, less stable
economies, experience in handling external uncertainties and competence in cultivating complex relationships—including those with local
lawmakers enabling improvement of the commercial environment— constitute a valuable capability for exercising and benefiting from ambidexterity.
The ambidexterity logic extends some existing
Academy of Management Perspectives
perspectives, such as the OLI (ownership, location, internalization) paradigm (Dunning, 1980,
1995) and the LLL (linkage, leverage, and learning) framework (Mathews, 2002, 2006), providing
a new way to understand the strategic behaviors of
EM MNEs. First, the ambidexterity logic explains
how OLI or LLL advantages can be generated. For
example, without a certain degree of competitive
competence, latecomers will find it difficult to
establish connections (relational competence)
with incumbents. While leveraging better resources from incumbents is important for latecomers, the firms themselves must excel in their own
competitive strengths. Similarly, learning can be
achieved through repetition of linkage and leverage, but such learning processes are generally slow.
Hence, EM MNEs often aggressively acquire
knowledge through more risk-taking acquisitions
instead of traditional partnerships.
Second, the ambidexterity view offers specific
channels through which OLI or LLL advantages
interactively emerge and subsequently promote
global success over time. Leveraging ownershipspecific advantages for short-term survival necessitates largely transactional competence,
while acquiring new capabilities for long-term
competitiveness depends in part on the firm’s relational competence in cultivating new ties with
partners and competitors. Third, the ambidexterity view delineates, in more detail than other
theories, EM MNEs’ distinctive behaviors and
strategies at the operational level. It explains not
only motivation and capability associated with
international expansion but also temporal orientations (co-orientation) and business-environment linkages (co-evolution) for EM MNEs, these
last two being inadequately explored by OLI and
LLL perspectives. Finally, the ambidexterity logic
offers insights into winning strategies for EM
MNEs competing not only in established markets
but also growing under institutionally and operationally “hard” conditions (e.g., Africa and the
least developed Asian countries). Ambidextrous
orientations enable them to tap a large geographic
scope and to undertake both incremental and
radical international expansion activities (e.g., acquisitions).
Why Ambidexterity Is Unique to EM MNEs
While ambidexterity should be a good practice for
all MNEs, EM MNEs have a greater incentive and
a stronger capability to be organizationally ambidextrous. In addition to the cultural, institutional,
and economic reasons explained above, the learning advantage of newness (LAN) also fosters EM
MNEs’ ambidexterity. Organizational ecologists
(Hannan & Freeman, 1984) have argued that
established MNEs often suffer from structural inertia, which deters ambidexterity (Shimizu &
Hitt, 2004). The LAN perspective (Autio, Sapienza, & Almeida, 2000) suggests that new ventures that enter international markets early in
their life cycles have inherent learning advantages
over established firms. Its central rationale is that
early-internationalizing firms tend to possess fewer
deeply embedded routines and face fewer initial
constraints; thus they can more easily recognize
new opportunities in international markets that
lead to successful expansion, growth, and performance advantages. Hence, they are more likely to
achieve the full potential of ambidexterity in international expansion.
Regarding co-orientation, for example, EM
MNEs are less strongly pressed by a myriad of
shareholders seeking short-term gains and more
capable of aligning short-term objectives with
long-term growth, compared to counterparts in
advanced countries, due to different ownership
and governance structures. Many privately owned
EM MNEs are either family oriented or niche
entrepreneurs that view outward FDI as a channel
for long-term growth (Luo & Tung, 2007). Those
publicly traded or state-owned EM MNEs are still
under heavy-handed governance and influence
from the home government through ownership
sharing and/or bureaucratic control (Young, Peng,
Ahlstrom, Bruton, & Jiang, 2008). Executives are
guided to seek long-term growth by the government, which influences these executives’ political
and professional careers. Similarly, co-competence is more typical of EM MNEs than Western
MNEs. Relational competence is generally portrayed as a supplement to transactional competence for Western MNEs, but it is at least equally
important as transa ...
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