Determinants of outward foreigndirect investment from BRIC

countries: an explorative studyDirk Holtbrugge and Heidi KreppelDepartment of International Management,

University of Erlangen-Nuremberg, Nuremberg, Germany

Abstract

Purpose – Outward foreign direct investment (FDI) of firms from Brazil, Russia, India and China hasincreased significantly during the last few years. Despite this trend, comprehensive research on thespecific determinants and antecedents of outward FDI from BRIC countries is still underrepresented.The purpose of this paper is to give a more comprehensive understanding of outward FDI from BRICcountries.

Design/methodology/approach – Based on an exploratory approach, case studies of eightcompanies were conducted. Both a within-case and a cross-case approach were conducted.

Findings – The findings reveal the relevance of determinants on the country, industry and firm level.Gaining access to new markets is of utmost importance for all firms. Additionally, most companiesseek to obtain access to technological resources and management know-how, therefore emphasizingthe availability of these resources in the target countries. While the internationalization of Brazilianand Indian companies is primarily driven by economic motives, many Chinese and Russianfirms also receive substantial political support from their governments to invest abroad, especiallyin strategically important industries. On the firm-level, the strength of firm-specific resourcesis highlighted. BRIC country firms possess specific strengths that help them to enter both developingas well as developed countries and to pursue their internationalization strategy.

Originality/value – The aim of this study is to systematically analyze the determinants of FDI of firmsfrom BRIC countries. While previous studies in this context are based on internationalization theorieswhich were at least implicitly focused on FDI of firms from developed markets, the authors use a more emicapproach and look for specific determinants of outward FDI of firms originating in BRIC countries.

Keywords Brazil, Russia, India, China, International business, International investments, Outward FDI,BRIC countries, Internationalization, Cross-case analysis

Paper type Research paper

Problem, objectives and structure of the paperThe analysis of outward foreign direct investment (FDI) motives, directions and formsis one of the major streams of research in international business. Its focus is primarilyon FDI from developed countries. Recently, however, a change in FDI patterns hasemerged and more companies from emerging markets make substantial investmentsabroad. In particular, FDI outflows from Brazil, Russia, India, and China (BRIC)countries have increased significantly throughout the last decade. Firms originating inthese countries invest not only in neighbouring developing but also in developedeconomies, e.g. the OECD countries. As a consequence, FDI from BRIC countries hasbecome an important factor in the global economy.

Originally, the term BRIC was coined by Goldman Sachs (2003) Head EconomistJim O’Neill. BRIC belong to the ten largest countries in the world in terms of populationand of GDP. Their economies are developing rapidly and are expected to surpass

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/1746-8809.htm

IJOEM7,1

4

Received 12 November 2009Revised 16 April 2010Accepted 2 September 2010

International Journal of EmergingMarketsVol. 7 No. 1, 2012pp. 4-30q Emerald Group Publishing Limited1746-8809DOI 10.1108/17468801211197897

the current richest countries of the world by 2050. Goldman Sachs predicts China andIndia to be the dominant global suppliers of manufactured goods and services. Braziland Russia will become similarly dominant suppliers of raw materials. Brazil isdominant in soy and iron ore, while Russia has enormous supplies of oil and natural gas.Together, they are likely to become the most important commodity suppliers to Indiaand China. According to a survey of the Boston Consulting Group, large companies fromthese countries are about to become major global players and will change the globalbusiness environment with innovative business models (Busch, 2007).

While several studies of the internationalization processes of firms from BRICcountries have been published in the last few years, most of them focus on a singlecountry and are based on conceptual frameworks which have been developedto analyze FDI from developed countries. Little is known, however, of whether the logicof these frameworks can be directly applied to OFDI from BRIC countries. The purposeof this paper is therefore to explore the determinants of FDI of firms located in the fourBRIC countries. In particular, differences to internationalization patterns of firms fromdeveloped countries will be outlined and we will show how these patterns contribute toconventional FDI theories. Both personal interviews with company representatives,as well as published materials, are analyzed to contribute to an understanding of thedifferences in FDI patterns in developed countries and BRIC countries.

The remainder of this paper is organized as follows. The next section includes theoutline of some recent trends of FDI from BRIC countries. Next the methodology isexplained, followed by case studies of the internationalization of eight firms. Withreference to Eisenhardt (1989), both a within- and a cross-case analysis is conducted.Based on these case studies, several research propositions about FDI from BRICcountries are derived. Finally, the paper ends with a short summary of the main resultsand implications for future research.

FDI of firms from BRIC countries: some recent trendsIn the last few years, a substantial number of firms from emerging markets haveentered the international marketplace. Economic liberalization and fundamentalchanges in the foreign trade regimes of BRIC have not only attracted high FDI inflowsto these countries, but have also motivated companies from these countries to investabroad (Hoskisson et al., 2000). According to the World Investment Report (UNCTAD,2006), the rate of outward FDI growth by firms from emerging markets has outpacedthe FDI growth by firms from developed countries. Furthermore, UNCTAD hasprojected that this trend will be likely to continue in the years ahead.

In BRIC countries, not only have the FDI inflows increased significantly,but the level of FDI outflows also shows a considerable increase. As shown in Table I,Russia and China are the largest outward investors in 2008 (US$52,390mn andUS$52,150mn), followed by Brazil (US$20,457mn) and India (US$17,685mn) (UNCTAD,2005, 2009).

The stock of outward FDI from the BRIC countries has increased too. Table IIshows that the stock of outward FDI is particularly high in Russia, followed by Braziland China. In Russia, the country with the highest FDI outward stock among the BRICcountries in 2008, the figure has increased by more than 1,000 percent since the year2000 alone. Taking into account the figures from 1980 onwards, it is evident that FDIoutward stock grew mainly in the last five years (UNCTAD, 2005, 2007, 2009).

Outward FDIfrom BRIC

countries

5

MethodologyIn previous studies, various factors have been identified to explain FDI of emergingmarkets (van Agtmael, 2007; Aulakh, 2007; Bloningen, 2005). Whereas these studiesconsiderably contribute to the state of knowledge of the determinants of FDI fromcompanies headquartered in these countries, several questions remain unanswered. Forexample, the studies of Kalotay (2005) and Kumar (2007) are limited to one country,i.e. Russia and India, respectively, and thus may not explain the differences between thecountries. Similarly, Buckley et al. (2007) explore the determinants of Chinese outwardFDI. Data are analyzed up to 2001, whereas the majority of outward investments havetaken place since this time.

Another issue with existing studies is that several research hypotheses which werederived from previous research on FDI from developed countries were unsupported(Li, 2007). Thus, it seems that FDI of firms from BRIC countries cannot becomprehensively explained by factors that motivate FDI of firms from developedcountries. Buckley et al. (2007), for example, found that FDI of Chinese firms shows apositive correlation with host country political risk while firms from developed countriestypically show the reverse. The study of Makino et al. (2002) offers insights into locationchoices of Taiwanese firms and stresses the importance of asset-seeking overasset-exploitation in the case of investments. Douma et al. (2006) revealed the importanceof foreign versus domestic ownership of Indian firms which is of little relevance for firmsfrom developed countries. Lien et al. (2005) shed light on the role of corporate governance

2004 2005 2006 2007 2008

Brazil outflow 9,807 2,517 28,202 7,067 20,457Inflow 18,146 15,066 18,822 34,585 45,058Ratio 0.54 0.17 1.50 0.20 0.45Russia outflow 13,782 12,767 23,151 45,916 52,390Inflow 15,444 12,886 29,701 55,073 70,320Ratio 0.89 1.00 0.78 0.83 0.75India outflow 2,179 2,978 14,344 17,281 17,685Inflow 5,771 7,606 20,336 25,127 41,554Ratio 0.38 0.39 0.71 0.69 0.43China outflow 5,498 12,261 21,160 22,469 52,150Inflow 60,630 72,406 72,715 83,521 108,312Ratio 0.09 0.17 0.30 0.278 0.48

Source: UNCTAD (2005, 2009)

Table I.FDI outflows, inflowsand ratio (in mn US$)

1980 1990 2000 2005 2007 2008

Brazil 38,545 41,044 51,946 71,556 129,840 162,218Russia n.s. n.s. 20,141 120,417 255,211 202,837India 78 124 1,859 9,559 29,412 61,765China n.s. 4,455 27,768 46,311 95,799 147,949

Source: UNCTAD (2005, 2008, 2009)

Table II.FDI outward stock(in mn US$)

IJOEM7,1

6

in FDI decisions of Taiwanese firms, which is an issue that is rarely discussed in thecontext of firms from developed countries.

Since FDI of firms from BRIC countries is – at least in terms of their quantitativeimportance – a relatively new phenomenon, which according to these studies cannotbe fully explained by traditional internationalization theories, an exploratory andqualitative research design seems to be appropriate. Case studies are recognized as anappropriate method to in which to obtain a deeper insight into a new phenomenonand for exploration of factors which have been neglected in previous research,especially when the purpose is theory building instead of theory testing (Eisenhardtand Graebner, 2007; Yin, 2004).

Theoretical sampling was applied to select eight firms (two from each country)belonging to the largest outward investors in BRIC. Since the purpose of this study is toexplore new trends instead of testing theory, theoretical sampling is appropriate (Glaserand Strauss, 2008). A case study approach was selected because it is particularlysuitable for contextual analysis and identifying relationships (Eisenhardt and Graebner,2007). Based on the “principle of maximum constrast” (Lamnek, 2005, p. 191), i.e. theattempt to cover the whole range of possible determinants of outward FDI, the samplerepresents a wide range of industries and company backgrounds. According to Yin(2004), the cases are chosen because they are considered to be revelatory, extremeexamples and opportunities for unusual research access. We conducted multiple casestudies, as they typically provide a stronger base for theory building. Furthermore,the methodology of using multiple cases enables comparisons to determine whether afinding is ascribed to a specific case or consistently replicated by several cases(Eisenhardt, 1991; Eisenhardt and Graebner, 2007). Moreover, multiple cases enable abroader exploration of research questions and theoretical explorations and are thusconsidered appropriate to shed light on the research question (Eisenhardt and Graebner,2007; Yin, 2004).

Several portraits of large companies headquartered in the BRIC countries such asGazprom (Stern, 2005; Venkatesh et al., 2006), Lenovo (Feng and Elfring, 2004; Ling,2006), Tata (Thadamalla and Hotchandani, 2007), or Wipro (Hamm, 2007; Kreppel andHoltbrugge, 2008) have been published and have provided detailed informationfocused on the internationalization strategies of these firms. Moreover, companyhomepages, business reports, and periodical articles were analyzed.

These published sources were augmented by personal interviews with seniormanagers who are responsible for the internationalization of the firms. The interviewstook place in the firms’ home countries between 2008 and 2010. Additionalsemi-structured interviews with senior managers in the German subsidiaries of thesefirms were conducted. Germany is one of the most important recipient countries of FDIfrom BRIC countries and for most companies the key market in Europe (Tiwari andHerstatt, 2009). All interviews were audio-taped, transcribed and analyzed usingNVivo. NVivo allows for classifying, sorting, arranging, and exploring non-numericaland unstructured data (Crowley et al., 2002; Bazeley, 2007).

With reference to Eisenhardt (1989), both a within- and a cross-case analysis areconducted. The within-case analysis is aimed primarily at understanding the specificaspects of each case, while the cross-case analysis is directed at exploring similaritiesand differences between the cases. The over-arching aim is to develop researchpropositions that can be tested in future studies.

Outward FDIfrom BRIC

countries

7

Case studies of FDI of firms from BRIC countriesBrazil: WEG Equipamentos Eletricos and CVRDThe Brazilian WEG Equipamentos Eletricos S.A. was founded in 1961 in the city ofJaragua do Sul in the Southern Brazilian State of Santa Catarina. Recently, WEG is thelargest electrical motor manufacturing company in Latin America, with a market shareof 80 percent and the fourth largest global producer of electrical motors. The companyprovides efficient solutions for electrical machines globally, employing over 22,000 staff.It is a major systems supplier, providing complete turnkey solutions including motors,inverter drives, soft starters, PLCs, high-and low-voltage switchgear, transformers andsystems software to a diverse range of market sectors. WEG has established19 subsidiaries located all over the world, i.e. in the OECD countries Australia, Belgium,France, Germany, Italy, Japan, Mexico, Portugal, Spain, Sweden, the UK, and the USmanufacturing plants are located in Brazil, Mexico, Argentina, Portugal, and China.The products are sold in over 100 countries on all five continents. In 2007, the company’sturnover exceeded 2.2 US$bn, with more than 40 percent of revenues coming fromoutside Brazil.

In 2008 WEG began building a manufacturing plant in Hosur, close to Bangalore,India. The new plant began production of electrical motors at the end of 2009,expecting to reach full capacity by the end of 2013. According to the Administrativeand Investor Relations Director of WEG, Alidor Lueders, the Bangalore region isparticularly attractive for WEG operations:

The area offers excellent educational institutions and the qualified workforce in the area isvery high. The infrastructure of the area is also very good, with close access to majorhighways, railways and international airports.

Additionally, WEG has opened a sales office in Russia (WEG Russia), incorporated inNizhny Novgorod and has announced the establishment of another subsidiary in Dubai,United Arab Emirates (WEG Middle East), thus expanding its international businessesinto rapidly growing regions. WEG Russia will conduct products and systemscommercialization, distribution and technical assistance activities in Russia and in thecountries of the former soviet union. According to internal statements, these marketsoffer business potential in areas such as oil and gas exploration, production andtransportation. These distribution and commercialization subsidiaries are an integralpart of WEG’s internationalization strategy. In conjunction with its product capabilitiesin several countries, WEG is becoming a foremost supplier for global clients:

Regarding the markets we are operating in, we think that the recent tendencies will go on, forexample the growing importance of energy-efficiency as a factor which will generate agrowing demand for our products. Another tendency is the necessity of investments in theareas of electricity generation, supply and distribution in Brazil, as well as in other countrieswe are operating in, says Lueders.

At the same time we are carrying forward our strategy of continuous augmentation of thetechnical content of our products. We are convinced that we need to strengthen ourcompetitive position through additional revenues resulting from further investments,particularly abroad.

The company’s main competitive advantage is a strong focus on technology anddevelopment, in combination with low labour costs. Thus, the quality-price-trade off

IJOEM7,1

8

in comparison to foreign companies is very competitive. Another strength is thepursuit of developing specific solutions for different markets. In order to achieve this,WEG puts strong emphasis on constant learning, especially in the markets it isoperating in. Therefore, in most cases local employees are hired to have better access tocountry-specific know-how and to be as close as possible to customers. Anotherimportant motive for FDI is to mitigate exchange rate risks (Busch, 2007; WEG, 2009).

Companhia Vale do Rio Doce (CVRD) is also investing worldwide. Founded in 1942in Brazil and privatized in 1997, it is now one of the largest metal, mining and logisticservices companies in the world and figures in the list of the top 50 non-financialtransnational corporations from developing countries (UNCTAD, 2007). Althoughmostly producing in Brazil, the company is increasingly investing abroad. CVRD hasoperations in 16 countries on five continents through its mining operations, mineralresearch plants, and commercial offices, with more than 55,000 employees worldwide.Subsidiaries are located in the OECD countries Canada, France, Korea, Norway,Switzerland, the UK, and the USA. The largest outward investment was the acquisitionof the Canadian nickel producer Inco for US$18bn in 2006 (Busch, 2007). In 2008,approximately 85 percent of the company’s turnover of US$32.2bn was achieved inmarkets outside Brazil with 24.4 percent in Europe alone (CVRD, 2009). Recently,CVRD surpassed state oil company Petrobas as Brazil’s largest company, with amarket capitalization of around US$153bn.

CVRD’s purchase of Canada’s Inco has aided its diversification strategy andgeographical reach. The company thus has reduced its dependence on iron ore, whichaccounted for nearly three-quarters of its US$13.4bn in sales in 2005 (The EconomistBusiness Latin America, 2006). The geographical expansion of CVRD’s activities awayfrom its traditional base in Carajas is also considered as an important development.Beyond its presence in Canada, CVRD Inco controls projects in Indonesia andNew Caledonia. As a result, the Brazilian market will only account for 60 percent of thecompany’s assets, compared to 98 percent before the deal. More than one-fourth of itsassets will then be located in North America. Recently, CVRD signed a record long-termcontract with the European steel group ArcelorMittal to supply iron ore, reportedly thelargest contract signed between a steel company and an iron ore supplier. CVRD willsupply about 480mn tons of iron ore to ArcelorMittal plants over the next ten years.

According to an UNCTAD (2004) report , CVRD has invested abroad with specialinterests in accessing natural resources. A further reason is to be close to its largestclients to meet their specific needs and to increase the number of local markets it serves,as its products are not easily tradable (Chaddad, 2003). According to CVRD CEO Agnelli:

[. . .] foreign partnerships are key to our growing at a greater velocity [. . .]. What we need todo now is consolidate our position within the global context and with economy of scaleconsiderations in mind (Chaddad, 2003, p. 13).

In summary, outward FDI of the two Brazilian companies WEG and CVRD ismotivated primarily by market-seeking motives and access to technological andmanagement know-how. The opening of the Brazilian economy has increasedcompetition in the local market and forces firms to look for new markets abroad.A Central Bank of Brazil survey showed that a large portion of outward investment ismotivated primarily by financial reasons, rather than by international productionconsiderations (Banco Central do Brasil, 2007). According to Cyrino et al. (2005),

Outward FDIfrom BRIC

countries

9

most large Brazilian companies are still in the initial stages of their internationalizationprocess. However, as described above the amount of outward FDI has increased since2002 and this trend is likely to continue.

Russia: Gazprom and VneshtorgbankThe most prominent global investor originating from Russia is Gazprom, the world’slargest gas company, which by 2008 had in excess of 400,000 employees. It is primarilyfocused on geological exploration, production, transmission, storage, processing,and marketing of gas and other hydrocarbons. The company is reported to control over93 percent of Russia’s natural gas production and about a quarter of the world’s knowngas reserves (Heinrich, 2005; UNCTAD, 2006).

Gazprom was founded in 1989 when the former USSR Ministry of Gas Industry wasreorganized into the gas group Gazprom. Three years later it was transformed into ajoint-stock company. In contrast to many other Russian companies Gazprom was notdivided into several smaller companies but remains a monopolist with a strong stateinfluence. The first CEO was the former Russian Prime Minister Viktor Chernomyrdin.Before his election the new Russian President, Dmitry Medvedev acted as Chairman ofthe Supervisory Board.

Gazprom (2009) exports gas to 32 countries and is undergoing further expansion.Nearly, one-third of the total gas sales were exported to Europe, where Gazpromoperates mainly under long-term agreements that are derived from intergovernmentalframework treaties. Exports go to Austria, Belgium, the Czech Republic, Finland,France, Germany, Greece, Hungary, Italy, the Republic of Korea, Poland,The Netherlands, the Slovak Republic, Switzerland, Turkey, the UK, and the USA.The most important export market is Germany with an annual sales volume ofUS$7bn. Germany also serves as a bridge to other European markets (Stern, 2005).

To enhance its core business efficiency, Gazprom intends to diversify and expandbusiness activities, as well as optimizing gas transit costs and accessing end consumers.Another element of its internationalization strategy is to cooperate with internationalpartners. The joint venture WINGAS, for example, was founded in 1993 together withWintershall, a subsidiary of the German BASF, with Gazprom at the outset holding35 percent of the company’s shares. Once Gazprom increased its share to 50 percent,Wintershall was allowed to participate in the exploration of the Siberian gas fieldJushno-Russkoe, thus becoming one of the few foreign investors in the Russian gasindustry. These types of strategic partnerships have increased the market knowledge ofGazprom’s management and enabled the company to pursue its internationalizationstrategy to other core markets (Heinrich, 2003). According to a Gazprom senior manager,the two most important competitive advantages for international growth are theavailability of gas, one of the most important natural resources, and the strong support ofthe Russian Government which owns a 50.01 percent controlling share in the company.

Gazprom’s international activities are not documented in detail and the value of itsforeign assets is not publicly known, nonetheless a continued international expansioncan be expected. Gazprom was one of the first Russian companies to be listed on foreignstock exchanges. Recently, its deposit receipts are traded on the European stock marketsin London, Berlin, and Frankfurt, as well as on the US off-exchange stock market.

A possible obstacle for the international expansion of Gazprom is its negative imagein many countries of the world. According to the PR manager of the Berlin-based brand

IJOEM7,1

10

office Gazprom Germania, an unpublished study revealed that Gazprom is perceived asopaque, state dominated and unreliable. To overcome this Gazprom is currentlyundertaking strong marketing efforts to promote potential outward investments tobuild its global brand. For example, in 2007, Gazprom became the official sponsor ofSchalke 04, a popular German soccer club.

A second example of a prominent Russian company that is investing heavily inforeign markets is the state-owned bank Vneshtorgbank (VTB). Established in 1990 asthe Bank for Foreign Trade of the Russian Federation, today it is the country’s secondlargest bank. Since 2002, VTB has changed from its Soviet-era role of financing tradeand heavy industry into a world leader in banking, offering a wide range of productsand services, e.g. financing retail and small business lending, which are the industry’sfastest growing segments. Furthermore, the corporate banking business provides abroad range of commercial banking services and products to corporations, financialinstitutions and government agencies, including corporate lending and foreign tradetransactions, syndicated loans, deposit and settlement services, and precious metalsoperations and custody services. VTB focuses on its customers’ needs, diversepartnerships and supplying unique business solutions. It also tries to decrease costs bycentralizing the middle- and back-office functions worldwide (VTB, 2009).

According to financial analysts, strong state funding has kept VTB well capitalizedand supports the banks investments abroad (Bush, 2005). The bank has wholly ownedsubsidiaries in Switzerland, Cyprus and Austria. There are also subsidiaries in France(77.6 percent ownership), Germany (78.8 percent ownership), and the UK (89.1 percentownership). According to one respondent, these subsidiaries specialize in offeringfinancial and advisory services to Russian and CIS companies on operating in Europeanmarkets. This includes servicing export and import transactions as well as attractingand servicing European companies with business interests in Russia and the CIS. TheEuropean subsidiaries serve as a hub for the expansion of VTB’s European business.

In November 2006, VTB acquired a 5 percent share of the European AeronauticDefence and Space Company (EADS) worth US$1bn (VTB, 2009). Controversy soonsurrounded this investment owing to its strategic implications. While EADS mightbenefit from business in Russia, the expansion of Russian firms into such strategicindustries has triggered political concerns in parts of Europe. Moreover, the formerco-CEO of EADS, Thomas Enders, has criticized the impromptu entry of VTB intoEADS for its lack of transparency. After VTB was refused participation in the EADSshareholders committee, VTB sold its share to the similarly state-ownedVnesheconombank, which effectively transferred it to the charter capital of thenewly established Russian United Aircraft Corporation in 2008.

VTB is currently focused on the key markets of Ukraine, Georgia and Armenia. Ofstrategic interest are also Kazakhstan, Belarus, Azerbaijan, Uzbekistan and Kyrgyzstan.The Group has also built a broad platform in the UK, France, Germany, Austria, Cyprusand Switzerland, which has begun consolidation under its subsidiary, VTB Europe.Furthermore, according to one respondent, VTB plans to expand into selected countriesin Asia and Africa where inward investment by Russian corporate customers is expected.

In summary, the outward FDI of the two Russian firms is primarily driven by market-and efficiency-seeking motives. While these two examples differ from other examples inour sample as one firm is mainly exporting and the other is investing in the financialsector, they are nonetheless representative examples of the international expansion

Outward FDIfrom BRIC

countries

11

of Russian firms. Resource-based companies, particularly those in the oil and gasindustries, have been the driving force of outward FDI (UNCTAD, 2006) and theimproved financial situation. Owing to rising prices of gas and oil these firms have beenable to use more aggressive and/or demanding internationalization strategies (Vahtraand Liuhto, 2005b). However, the manufacturing and telecommunication industries aregrowing rapidly and are looking for growth beyond Russian borders, too.

Thus, the international expansion of Russian firms is a combination of economicand political factors with the state playing a strong role in promoting outward FDI.Moreover, it is believed that the oligarchy created in the 1990s continues to controllarge parts of the privatized natural resources of the country. This stimulated acapital-exporting behavior thus explaining how a lower-middle income country isbecoming a net capital exporter (Kalotay, 2005).

India: Reliance and WiproIndia’s largest private sector enterprise is the Reliance Group, founded byDhirubhai H. Ambani, with businesses in the energy and materials value chain.The group’s activities span exploration and production of oil and gas, petroleumrefining, petrochemicals, textiles, financial services and insurance, retail, telecom, andIT businesses (Srinivas, 2009). The group’s revenue is equal to approximately 3.5 percentof India’s GDP, contributing to over 6 percent of India’s exports. It is owned by one of theIndia’s largest investor families.

Reliance Industries Limited (RIL) is the flagship company of the Reliance Group. RIL’soperations range from the production of crude oil and gas to polyester, polymer andchemical products and finally to the production of textiles. In 2006 exports reachedUS$7.3bn which accounted for 37 percent of total revenues of US$19.98bn. RIL hasbusiness activities and customers in more than 100 countries around the world. Foreignproduction facilities are located in four European countries. Amongst others, there is awholly owned subsidiary in The Netherlands and a 50 percent ownership subsidiary inthe UK (Reliance, 2009). In 2006, RIL acquired Germany’s Trevira, the leadingmanufacturer of polyester fibres in Europe, thereby becoming the world’s leadingpolyester manufacturer (Dorfs and Kewes, 2006; Trevira, 2007). Trevira has a capacity toprovide 130,000 tonnes per annum of polyester fibre and yarn, spread over four locationsin Europe, namely Bobingen and Guben (Germany), Silkeborg (Denmark) andQuevaucamps (Belgium). Additionally, it uses a state-of-the-art R&D facility atBobingen. Trevira also has several valuable patents and technologies, together with astrong R&D setup with substantial accumulated research knowledge. With theacquisition of Trevira, RIL acquired the European market leader for high valueapplications of polyester, especially in automotive and home textiles. Furthermore, it is awell-known and recognized brand amongst customers and producers of synthetic fabrics.

Additional foreign expansion is planned, including a joint venture with the USmarket leader Dow Chemical and buying into the French business group Carrefour(Rybak, 2007). Recently, Capgemini, the French IT service group, held talks withReliance Communications that may lead to the first acquisition of an importantWestern IT company by one of the India’s fastest growing competitors. According toone respondent, this would give Reliance access to a client base in continental Europeand thus boost it into the world’s top ten IT groups by market share. According to ananalyst’s report it would take India’s largest IT firms a number of years to challenge

IJOEM7,1

12

the top service providers unless they make a major acquisition such as this (Young andBlackmore, 2007).

One key factor of its successful international growth is RIL’s high degree of verticalintegration across the global value chain. Moreover, RIL focuses on access tocutting-edge technology and properly meeting local and global demands. This is basedon the leadership position in its 44 percent domestic market share in polymers in India.RIL has strong aspirations to be the lowest cost manufacturer and service providerworldwide (Roy, 2005; Ghosal et al., 2002). This is achieved in part by global low sellingand very modest labor costs for a highly skilled workforce.

Wipro Technologies is a global services provider delivering technology-drivenbusinesses (e.g. IT services, product engineering solutions, technology andinfrastructure services, and consulting services) that meet the strategic objectives ofits clients. Headquartered in Bangalore, it has 46 development centres across the globe,with ten located outside of India. Wipro delivers to customers in 29 countries.Subsidiaries are located, e.g. in Australia, Belgium, Canada, Finland, France, Germany,Italy, Luxemburg, The Netherlands, Sweden, Switzerland, and the UK (Wipro, 2009).In 2006, 60 percent of its total sales revenues of US$2.4bn were generated in theAmericas, 29 percent in Europe, with only 11 percent in India and the rest of the world.

According to an internal report, the international expansion is focused on Germany,Canada, and Japan as these locations are expected to be the next growth engines (Wipro,2006). In 2006, Wipro set up a mobile handset testing lab in Kiel, Germany. The entry intothe German market was considered a milestone on the way to becoming a globalcompany. As large companies in Germany and other developed countries have relativelyexpensive local workforces, they came under pressure from leaner competitors to reducecosts. As a result, Wipro served many customers from India for short periods of time.Recently, it is clustering staff in key markets, seeking to create a critical mass of salesand service delivery. Wipro also created monitoring and maintenance software thatallows the company to perform 90 percent of the work in India, with only the remaining10 percent being on-site. This led to an initial cost savings of 30 percent. In order toachieve this, Wipro puts strong efforts in innovation and technology development,as well as in personnel development and placing a strong focus on customers. Throughacquisitions and joint ventures, Wipro seeks to broaden its technical capabilities inspecific areas and deepen its knowledge base (Hamm, 2007; Wipro, 2009): “As we madethese acquisitions, we gained a higher degree of faith in ourselves,” explainsAzim Premji, Chairman of Wipro. “You do one and you succeed with the integration.Then it feeds on itself. It gives us the confidence to do many more” (Hamm, 2007, p. 67).

In order to satisfy the needs of its European customers, Wipro will modify its leanstaffing model and place more employees in strategic locations to be closer to potentialcustomers. In the past, Wipro served many customers by providing experts from Indiafor short periods of time. Now it is recruiting and clustering people in key markets,especially in Europe. To meet these global goals, Wipro prefers to focus on theacquisition of small niche players with highly specialized workforces, instead ofpursuing a pan-European acquisition strategy in the pursuit of economies of scales.As one top manager mentioned, Europe is perceived to be a diverse market where it iseasier to make use of local companies with a strong market presence rather than groworganically. Wipro is increasingly recognized as a reliable business partner, owing toacquisitions of and strategic partnerships with well-known European companies.

Outward FDIfrom BRIC

countries

13

According to Ten Nijenhuis, Senior Vice President for Europe, Wipro needs localemployees who speak the local language and know the local culture in order to win theconfidence of major customers (Kreppel and Holtbrugge, 2008).

To summarize, outward FDI of the two Indian firms in our sample is primarily basedon market-seeking motives, access to technological and management know-how andseeking economies of scale. India’s economy is poised to continue to grow at a rate ofalmost 8 percent, which is a major factor for realizing their vision of global growth,as Indian companies are able to grow in their home market before going abroad. In the ITsector in particular, many foreign MNCs have outsourced their activities to Indiansoftware firms. After significant growth they are now beginning to invest in foreignmarkets where most of their customers are located. Therefore, the main outward FDIcan be found in the software and IT services, i.e. the most dynamic components of theIndian economy, although large Indian companies in the steel and chemicals industrieshave also begun to internationalize by acquiring competitors, particularly in the OECDcountries. Prominent examples of this trend are the acquisitions of the Anglo-Dutch steelmaker Corus by Tata Steel worth US$13.1bn. (Sinha, 2007) and of the British-Luxemburgcompany Arcelor by Mittal Steel worth US$33.2bn (Flash et al., 2007).

China: Lenovo and HaierLenovo is a technical company that develops, manufactures and markets high-qualityPC products and value-added professional services (Feng and Elfring, 2004). Foundedin 1984 as Lianxiang Group, it soon became the most famous brand in China, withLianxiang computers (English name: Lenovo) becoming the symbol of the Chinesecomputer industry to Chinese people. It was the largest manufacturer of PCs in Chinawhen it acquired IBM’s personal computing division in 2004 for US$1.2bn. With theacquisition of this brand, Lenovo has become a global leader in the PC market withapproximately US$13bn in annual revenue (Lenovo, 2009). Executive headquarters arelocated in Purchase, New York (USA), with principal operations located in Beijing(China) and Raleigh, North Carolina (USA) in addition to a worldwide salesorganization.

Lenovo’s initial success could be attributed to its understanding of the dynamics ofthe Chinese PC market. Following the opening up of the Chinese economy, Lenovoestablished partnerships with leading MNCs who were entering China and recognizedthat in order to compete in the Chinese PC market their prices had to be competitive.Lenovo dominated the Chinese PC industry holding a 27 percent market share in 2005.A declining market share, increased competition from international brands, lowdemand and falling prices forced Lenovo to look for new global markets. According toa Lenovo senior manager:

[. . .] creating and sustaining brands in developed markets is complex, expensive, anduncertain. The biggest obstacle is that we do not have vital marketing skills. It took years,and a great deal of money, before the giant Japanese and Korean consumer electronicscompanies established themselves abroad. We tried their method before, but the result wasvery slow.

Its first step into international markets took place in 1991 when the companyestablished Lenovo Germany. Major efforts to globalize did not begin before 2001 whenLenovo began selling laptops in Europe. By 2003, Lenovo had established sales officesin Austria, France, The Netherlands, Spain, and the UK.

IJOEM7,1

14

Nevertheless, prior to the acquisition of IBM’s PC division Lenovo was virtuallyunknown outside of China. Through the IBM deal, Lenovo absorbed and integrated theskills from both companies and acquired global brand recognition, an internationalcustomer base, a world-class distribution network and leading-edge technology (Ling,2006). In its initial stage of internationalization, Lenovo tried an approach of expensivegreenfield investments but failed to establish brand awareness. The acquisition of theIBM PC business has given Lenovo IBM’s R&D and notebook manufacture capability,a well-known and recognized brand and a world-class management team (Liu, 2007).According to a Lenovo senior manager:

[. . .] if Lenovo had done it itself, it would have taken several times the money and even8 to 10 years. Most importantly, those efforts would not necessarily guarantee that we wouldreach that level of achievements, as IBM units had (Deng, 2008, p. 26).

Its leading-edge PCs are recognized as user-friendly and are known for their tailor-madedesigns and customized solutions for complex consumers’ needs. Followingthe acquisition, Lenovo’s adaptability and acquisition of knowledge contributes to itsbusiness performance. Lenovo pays special attention to its customers’ needs and toon-going technological innovations.

Another Chinese company increasingly investing abroad is Haier. The company wasfounded as Qingdao Refrigerator Factory in 1984 by a collectively owned manufacturerof electrical devices. Haier is now a conglomerate of electrical household appliances andconsumer electronic products company and one of the most successful companies inChina. Its main products are refrigerators, air conditioning systems, washing machines,dishwashers, computers, mobile phones, and TV sets. It is the fourth largest householdappliances producer in the world, with sales in over 160 countries. Haier has more than240 subsidiaries, 30 plants overseas, eight R&D centers, 110 design centers throughoutthe world and 50,000 employees. Haier’s focus industries include technology research,manufacturing, trade, and financial services. In 2005, Haier reached a turnover ofHK$4.9 (approximately US$ 630mn) (Haier, 2006; Palepu et al., 2005).

Haier was driven abroad by the combined effects of the saturation of the Chinesehome appliances market and intensified competition of global manufacturers. As itsmarket position was consolidated in China (where it had found a large and growinghome market), it began to pursue internationalization in 1995 by entering the USmarket. According to a study of Ghemawat and Hout (2006), no foreign brand had everbefore penetrated the US white goods market so successfully.

While Haier faced poor production quality during its first years, it began licensingtechnology from Germany’s Liebherr and then began exports to Germany under OEMin 1992. The export strategy focused on exports to developed markets first anddeveloping markets later.

In Europe, Haier implemented its “one product at one time” strategy. In France andItaly for example, Haier first chose to focus on its air conditioners. The air conditionermarket was relatively new and it did not make much difference if they were made inJapan, Korea or China. After having established brand awareness in those markets,Haier started selling refrigerators and washing machines. Among the developedcountries, Germany has the toughest market entry requirements meaning that onceHaier had met German requirements, other countries would pose fewer difficulties( Jinsheng and Ye, 2003).

Outward FDIfrom BRIC

countries

15

Haier’s headquarters are located in Italy. Distribution centers are located in France,Germany, Italy, and Spain. “Our purpose in exporting is to establish a brand reputationoverseas”, says Zhang Ruimin, CEO of Haier (Palepu et al., 2005, p. 10). Haier uses localfinance, talent and culture to enhance its brand reputation (Haier, 2009). According toZhang Ruimin, any future CEO of Haier will then be able to focus wholly on strategicissues and make decisions from a global point of view (Ruimin, 2007).

Liu and Li (2002) emphasize the strong international mindset of Haier’s CEOZhang Ruimin as an internal driver for internationalization. In order to avoid tariffs, toreduce transport costs, and to be able to control its services and distribution activities,Haier established several regional manufacturing centers. The company also putsstrong emphasis on technological innovation, utilizing highly qualified humanresources. By 2006, it had obtained more than 6,000 patented technology certificatesand close to 600 software intellectual property rights.

In summary, the outward FDI of the two Chinese companies is driven primarily bymarket- and technology-seeking motives. The need to seek strategic assets via FDI iscommon to both Lenovo and Haier, as they are operating in globally competitiveindustries. Since China joined the WTO in 2001, several MNCs have invested in thecountry, established wholly owned foreign subsidiaries and substantially increasedthe competition in the local market. This forced Chinese companies to expand abroad forfurther growth to compensate for decreasing domestic market share. This trend emergedafter the early 1990s in competitive manufacturing industries (particularly those relatedto electronics), as well as information and communication technologies. Companies suchas Haier are now global players in consumer electronics, while Lenovo has become thethird largest PC manufacturer in the world. The Chinese Government has stronglyencouraged and supported the internationalization of Chinese companies (Li, 2007). Thisis viewed as a unique external home context for Chinese entrepreneurs (Child andRodrigues, 2005). Many Chinese companies have started to pursue internationalizationon an experimental basis while the government has adopted a flexible and practicalapproach to governing their international activities (Feng and Elfring, 2004):

The Chinese overseas acquisition is led by public sector enterprises. This is fundamentalbecause bank finance is needed for such acquisitions and state-owned banks would tend tosupport state-owned enterprises, said Jack Z. Chen, then Chairman Asia-Pacific of theUS-based Barrington Associates in 2004 (Iyengar, 2004).

Yang and Stoltenberg (2008), also state that the internationalization process of Chinesefirms cannot be viewed in isolation from the institutional environment in which it hastaken place (Hoskisson et al., 2000).

FDI of firms from BRIC countries: a cross-case analysisIn the following section a cross-case analysis is conducted, with the aim of exploringthe similarities and differences between the cases and deriving propositions for futurestudies. An overview of the eight cases is presented in Table III.

The case studies reveal that firms from BRIC countries have many similar motivesfor internationalization. The most important are market-seeking motives which arerelevant for all firms in our sample. Moreover, most companies seek to obtain access totechnological resources and management know-how. On the other hand, severaldifferences in the determinants of their outward FDI are obvious. For example,

IJOEM7,1

16

WE

GC

VR

DG

azp

rom

VT

BR

elia

nce

Wip

roL

enov

oH

aier

Ind

ust

ryE

lect

ric

mot

ors

Min

ing

,met

als

Gas

Fin

ance

Oil

and

gas

,ch

emic

als

ITP

erso

nal

com

pu

ters

Hou

seh

old

app

lian

ces,

elec

tron

icco

nsu

mer

pro

du

cts

Ow

ner

ship

Pri

vat

eP

riv

ate

afte

rm

id-1

990s

pri

vat

isat

ion

Pri

vat

est

ock

com

pan

y,

gov

ern

men

tsh

are:

50.0

1p

erce

nt

Sta

te-o

wn

edP

riv

ate

Pri

vat

eP

riv

ate,

wit

hth

est

ate

hol

din

ga

28p

erce

nt

shar

e

Pri

vat

e,“c

olle

ctiv

e”

Em

plo

yee

s15

,000

33,0

0040

0,00

029

,000

25,0

0066

,000

20,0

0050

,000

Mai

nco

mp

etit

ive

adv

anta

ges

Dom

inan

tp

osit

ion

inh

ome

mar

ket

,lo

wla

bou

rco

sts,

and

mod

ern

tech

nol

ogy

Dom

inan

tp

osit

ion

inh

ome

mar

ket

,lo

wla

bou

rco

sts,

and

low

exp

loit

atio

nco

sts

Dom

inan

tp

osit

ion

inh

ome

mar

ket

,lo

wex

plo

ita-

tion

cost

s,an

dst

ron

gg

over

nm

ent

sup

por

t

Low

lab

our

cost

sD

omin

ant

pos

itio

nin

hom

em

ark

et,

low

lab

our

cost

s

Low

lab

our

cost

sD

omin

ant

pos

itio

nin

hom

em

ark

et,

low

lab

our

cost

s,an

dst

ron

gg

over

nm

ent

sup

por

t

Dom

inan

tp

osit

ion

inh

ome

mar

ket

,lo

wla

bou

rco

sts,

and

stro

ng

gov

ern

men

tsu

pp

ort

Mai

nou

twar

din

ves

tmen

ts

Su

bsi

dia

ries

inm

ost

OE

CD

cou

ntr

ies

Acq

uis

itio

nof

Can

ada’

sIn

co(U

S$1

8.0b

n)

Acq

uis

itio

nof

Au

stra

lia’

sA

MC

IH

old

ing

(US

$661

.0m

n)

Dea

lsin

UK

,to

ug

hex

pan

sion

pla

ns

for

US

and

Eu

rop

ean

mar

ket

s

Acq

uis

itio

nof

a5

per

cen

tsh

are

ofE

AD

S(U

S$1

.0b

n)

in20

06A

ffili

ated

sub

sid

iari

esin

Au

stri

a,F

ran

ce,

Ger

man

y,

Sw

itze

rlan

d,

and

the

UK

Acq

uis

itio

nof G

erm

any

’sT

rev

ira

(e80

.0m

n)

in20

06

Su

bsi

dia

ries

inm

ost

OE

CD

cou

ntr

ies

Acq

uis

itio

nof

Ner

ve

Wir

eIn

c.,

US

A(U

S$1

8.7m

n)

Acq

uis

itio

nof

IBM

’sP

Cd

ivis

ion

in20

04(U

S$1

.2b

n)

En

try

into

US

mar

ket

in19

95,

dis

trib

uti

once

ntr

esin

Fra

nce

,G

erm

any

,It

aly

,an

dS

pai

n (con

tinued

)

Table III.Cross-case analysis

Outward FDIfrom BRIC

countries

17

WE

GC

VR

DG

azp

rom

VT

BR

elia

nce

Wip

roL

enov

oH

aier

Mai

nd

eter

min

ants

ofF

DI

Mar

ket

seek

ing

,ac

cess

tote

chn

olog

ical

and

man

agem

ent

kn

ow-h

ow,

mit

igat

ing

exch

ang

era

teri

sks

Mar

ket

seek

ing

,to

be

clos

eto

cust

omer

s

Mar

ket

seek

ing

,ef

fici

ency

seek

ing

,ac

cess

toen

dcu

stom

ers

Mar

ket

seek

ing

,ef

fici

ency

seek

ing

Mar

ket

seek

ing

,ac

cess

tote

chn

olog

ical

and

man

agem

ent

kn

ow-h

ow

Mar

ket

seek

ing

,to

be

clos

eto

cust

omer

s,ac

cess

tote

chn

olog

ical

and

man

agem

ent

kn

ow-h

ow

Mar

ket

seek

ing

,ac

cess

tod

istr

ibu

tion

chan

nel

s,g

lob

alb

ran

dre

cog

nit

ion

,ac

cess

tote

chn

olog

ical

and

man

agem

ent

kn

ow-

how

Mar

ket

seek

ing

,re

du

cin

gtr

ansp

orta

tion

cost

s

Mai

nfo

rms

ofF

DI

Sal

esof

fice

s,re

pre

sen

tati

ve

offi

ces

Rep

rese

nta

tiv

eof

fice

s;M

&A

s;st

rate

gic

alli

ance

s

Rep

rese

nta

tiv

eof

fice

sR

epre

sen

tati

ve

offi

ces;

stra

teg

ical

lian

ces

M&

As;

stra

teg

ical

lian

ces

M&

As;

stra

teg

ical

lian

ces

M&

As;

rep

rese

nta

tiv

eof

fice

s

M&

As;

rep

rese

nta

tiv

eof

fice

s

Mai

nd

irec

tion

ofF

DI

For

war

din

teg

rati

onF

orw

ard

inte

gra

tion

For

war

din

teg

rati

onF

orw

ard

inte

gra

tion

For

war

din

teg

rati

onF

orw

ard

inte

gra

tion

For

war

din

teg

rati

onF

orw

ard

inte

gra

tion

Table III.

IJOEM7,1

18

firms such as Gazprom, Lenovo, and Haier have already been leaders in their domesticmarket, while others such as Wipro are growing by “going global”. Wipro made thecrucial strategic decision to move ahead in 2005. “We had a lot of debate. Some peoplewanted to ramp up right now. They wanted to have a leap of faith,” says Ramesh Emani,President of the Product Engineering Services division. “In the end, we decided to groworganically, in response to demand. We didn’t want to dramatically scale immediately.”(Hamm, 2007, p. 61).

Differences can also be observed concerning the role of the home government. Whilethe internationalization of Brazilian and Indian companies is mainly market driven,Chinese and Russian firms also receive strong support from their governments to investabroad and to become world leaders in their particular industries (Alon and McIntyre,2008; Luo et al., 2010). One Gazprom manager revealed: “The government stronglysupports our investment in other countries. Many top managers had held leadingpositions in the government before. Now they help Gazprom to expand abroad.”

With reference to different levels of analysis, country-, industry- and firm-leveldeterminants of FDI of firms from BRIC countries can be distinguished (Figure 1).Country-level determinants such as the size of the host market, the potential of forwardintegration to the host market and the host market’s level of technological and managementknow-how are relevant for all firms from BRIC countries, while industry-level determinantsdiffer between particular industries. Firm-level determinants consider the features ofparticular firms. In the following section, this classification is used to analyze thedeterminants of outward FDI from BRIC countries in greater depth.

Country-level determinants of FDIOur case studies reveal that market-seeking motives are one of the main drivers forFDI of firms from BRIC countries. Despite the large populations, all firms in the BRICcountries face a home market that is limited in terms low per-capita GDP. For furtherexpansion they are therefore obliged to seek growth opportunities outside their homemarkets.

Figure 1.Country-, firm- and

industry-leveldeterminants of FDI

Country-level Firm-level Industry-level

Level of technologicaland managementknow-how in the

host market

Potential of forwardintegration into host

market

Size of thehost market

Strength of firm-specific resources

Competitive pressuresin the home market

Strategic importance ofthe industry for thehome government

FDI fromBRIC countries

Outward FDIfrom BRIC

countries

19

Interestingly, most firms in our sample see these opportunities not in neighbouringdeveloping countries, but in large and prosperous OECD economies. Many firms fromBRIC countries have established foreign subsidiaries or acquired domestic firms in thesemarkets as their first moves towards internationalization. Germany was one of the firstmarkets for Gazprom and Wipro, while Lenovo and Haier expanded to the USA.

Zhang Ruimin, CEO of Haier, explains this strategy:

We go to easier markets after we first penetrate difficult markets such as the United States andEurope. These are much bigger markets. They are also the home markets of our largest globalcompetitors, and we believe that if we can succeed here, we can succeed in easier markets [. . .]. Ifwe can effectively compete in the mature markets with such brand names as GE, Matsushita, andPhilips, we can surely take the markets in the developing countries without much effort [. . .]. It isjust like what we did with the domestic market. After Haier refrigerators had taken Beijing andShanghai, we met no difficulties getting into medium and small cities (Palepu et al., 2005, p. 11).

This behavior contradicts classical models such as the learning theoryof internationalization by Johanson and Vahlne (1977) that suggests a stepwiseinternationalization from psychically close to psychically more distant countries (psychicdistance chain). Although firms from BRIC countries are also active in neighbouringdeveloping countries, they clearly prefer investments in developed countries, which aremore attractive in terms of market size and market potential (Luo and Tung, 2007).Moreover, the fierce competition they face in developed markets may help them to learnfrom competitors and to overcome disadvantages resulting from negativecountry-of-origin effects. Thus, we propose:

P1. Outward FDI from BRIC country firms is the higher, the larger the size of thehost market is.

Most firms in our sample have exported to foreign markets before they migrated to moresophisticated forms of internationalization such as FDI, thus following theestablishment chain proposed by Johanson and Vahlne (1977). This can be explainedin part by the fact that in an ever-changing and competitive business environment it isbecoming more important to be close to customers. Firms are then able to adapt productsand services to specific customer needs. This applies to developed countries inparticular, where customers have often very sophisticated and individual requirements.

The transition from exports to FDI can also be explained by the specific competitiveadvantages of firms from BRIC countries in comparison to firms from OECDcountries. All firms in our sample benefit from low labour costs and low exploitation orprocurement costs in their home countries. Cost advantages which are homecountry-specific allow these firms to deliver their products and services at much lowerprices than competing foreign firms. Cuervo-Cazurra (2007) argues that emergingmarket firms which face location advantages in their respective country of origin aremore likely to start their internationalization using marketing subsidiaries in the hostcountry. On the contrary, the competitive advantages of firms in developed countries aremostly derived from unique products and processes as well as highly recognized brands(Lopez-Claros et al., 2006; Porter et al., 2002). They often invest in BRIC countries in orderto benefit from low labour costs and other cost advantages which they are lacking intheir home countries. Thus, they can be characterized to a great extent by a backwardintegration of their activities, i.e. by selling products to customers in their home marketswhile producing and outsourcing processes to countries with low labour costs.

IJOEM7,1

20

Firms from BRIC countries, in contrast, realize a forward integration with upstreamactivities such as inbound logistics and operations located in their home markets anddownstream activities like sales and services transferred to developed countries. This isparticularly true for firms in the primary sector such as CVRD and Gazprom. Similarly,the internationalization strategy of VTB is aimed to follow its clients to foreign markets.Wipro perceives FDI necessary in order to be recognized as a reliable business partnerby foreign customers. For Lenovo, the most important motive was to get access tomarketing know-how. These examples show that firms from BRIC countries mainly gointernational in order to acquire management and marketing know-how and not toexploit cost advantages that can be obtained more easily in their home countries. Thus,outward FDI is perceived as a short cut to relevant knowledge which requires proximityto customers, technology partners, and competitors. Summarizing these considerations,the following proposition is derived:

P2. FDI from BRIC country firms is more likely to be in the form of forwardintegration rather than backward integration.

Aside from market-seeking motives, resource-seeking motives are vital forthe internationalization of firms from BRIC countries. As mentioned above, theircompetitive advantages are derived primarily from low labour and procurement costs.On the contrary, they often lack recognizable brand names and modernmanagement-/marketing know-how and their technological equipment is ratheroutdated. One way to overcome these limitations is to cooperate with firms indeveloped countries or acquire firms in developed countries that possess these resources.An important motive of VTB to acquire a 5 percent share of EADS was to access superiortechnology and modern management know-how (Schmid, 2006). Similarly, Lenovo’sacquisition of IBM’s personal computing division was motivated for technologicalreasons and the opportunity to build a global brand image. The former Indian PrimeMinister Atal Bihari Vajpayee emphasized the importance of resource-seeking motives:“Outward investment [. . .] will enable Indian companies to take advantage of globalopportunities and require technological and other skills for adoption in India” (Iyengar,2004). Makino et al. (2002) propose that these firms engage in FDI in a developed countrynot only when they possess exploitable firm-specific advantages but especially whenthey intend to seek technology-based resources and skills that are not available in therespective home country. “Chinese firms in particular have a tremendous, unsatisfieddemand for technological, as well as, management know-how”, says the managingdirector of a German mechanical engineering company that was acquired by its long-timeChinese joint venture partner and emphasizes that:

[. . .] it is definitely a strategic investment, not a financial investment. Therefore, the Chinesefirm is not focused on revenue but rather primarily on know-how. With our know-how, it willbe able to grow and develop sophisticated technological skills which will help the firm tobecome a global player with global-standard products.

Accordingly, while conventional theory views FDI as a firm’s attempt to pursuethe exploitation of firm-specific assets, firms from emerging markets tend to investin developed countries to gain access to technological and management know-how.Thus, outward FDI is aimed to acquire new resources rather than exploitingexisting ones. This can be realized by networks (Chen and Chen, 1998;

Outward FDIfrom BRIC

countries

21

Elango and Pattnaik, 2007; Yiu et al., 2007), business group affiliation (Garg and Delios,2007), as well as mergers and acquisitions (Deng, 2009). Thus, we propose:

P3. Outward FDI from BRIC country firms is more likely when the host countryprovides high levels of technology-based resources, as well as managementknow-how.

Industry-level determinants of FDIWhile the internationalization of the Brazilian and Indian firms in our study is mainlymarket driven, the Chinese and Russian firms receive strong government support toinvest abroad. This is especially the case in industries that have been declared asstrategic such as oil and gas industries in Russia or the automobile and electronicindustries in China. According to Liuhto and Jumpponen (2003), the internationaloperations of Gazprom are subject to far-reaching political interventions, so one couldargue that it first serves Russian foreign policy and subsequently its own businessinterests. Other studies have also found economic motives alone do not adequatelyexplain the international activities of Russian companies (Vahtra and Liuhto, 2005). ForChinese firms, a significant government influence and support in their course ofinternationalization can also be observed. Lenovo is a spin-off of the Chinese Academy ofScience and continues to be a state-owned enterprise (Escobar, 2005). Similarly, Haierwas offered several preferential conditions by the government that were not open toother Chinese companies. The company was permitted, for example, to establish afinancial company, to be the majority shareholder of a regional commercial bank and toform a joint venture with an US insurance company. Without its status as a globalplayer, its active pursuit of internationalization and its dominant position in the homeappliances sector, it would not have been possible for a manufacturing firm to enter theChinese financial sector (Liu and Li, 2002).

Government support for the Brazilian and Indian firms in our sample is much lower.Nevertheless, strategic industries such as natural resources in Brazil or IT andpharmaceuticals in India enjoy tax breaks and public infrastructure investments whichenable them to invest abroad more easily. These arguments, can be summarized as follows:

P4. Outward FDI from BRIC country firms is more likely when the industry inwhich they operate in is considered important by the home countrygovernment.

Another industry-level determinant of FDI is the competitive pressure in the homemarket. After China’s admission to the WTO Lenovo was faced with a declining marketshare, increasing competition from international brands, low demand and falling prices.As a consequence, of the growing competition in its home market, the company lookedfor market opportunities abroad. Similarly, VTB invested in other European countriesonly after foreign banks had begun to enter the Russian financial market. Wipro isincreasing investments abroad as more foreign firms enter and expand into the Indianmarket.

In the coming years, several sectors which were previously closed in the BRICcountries will be opened to foreign investors. This will enhance the competitivepressures in these industries and hence force domestic firms to look for businessopportunities abroad. Such cross-investment strategies will become more importantand market shares in the domestic market will decrease. This leads to P5:

IJOEM7,1

22

P5. Outward FDI from BRIC country firms is more likely when they are exposedto greater competitive pressures in their respective home market.

Firm-level determinants of FDIAt the firm level, the strength of firm-specific resources is the most importantdeterminant of outward FDI. According to Barney (1991), these firm-specific resourcesinclude different assets, capabilities, organizational processes, and information andknowledge. Firm-specific resources lead to sustained competitive advantage in thedomestic market and allow firms to grow there before entering the global marketplace.Several firms in our sample such as WEG, CVRD, Gazprom, Reliance, Lenovo, and Haierwere already leaders in their domestic market prior to expansion abroad. The dominantposition in their home market allowed them to develop firm-specific resources such as torecruit the most qualified employees, to exploit economies of large-scale and to getpreferential access to raw material and distribution channels. As a consequence, they arewell equipped for their international activities.

The predominant strategy of BRIC country firms differs from that of firms fromdeveloped countries where market leaders often prefer follower strategies in terms ofinternationalization. One explanation for this might be that in developed countries evensecond-tier firms are able to internationalize, while such firms in BRIC countries lack therequired financial, technical, and personal resources to expand successfully to developedcountries. Moreover, the nature of resources that are relevant for internationalizationdiffers between firms from BRIC countries and those from developed countries.While the latter often possess sophisticated technologies and advanced managementknow-how, firms from BRIC countries – as argued above – often lack these resources.Their firm-specific advantage is more likely to be based on the access to raw materialand natural resources and the ability to scale up their operations. One of our interviewpartners from an Indian firm mentioned:

One of our key advantages compared to foreign firms is that we can produce any number in ashort period of time. Our resources are unlimited. What restricts us is only the globaleconomic crisis and the resulting problems of our foreign customers.

Based on these considerations, the following proposition is derived:

P6. Outward FDI from BRIC country firms is more likely when they possessstrong firm-specific resources.

Contribution, limitations and suggestions for future studiesThe aim of this study is to systematically analyze the determinants of FDI of firms fromBRIC countries. While previous studies in this context are based on internationalizationtheories which were at least implicitly developed for FDI of firms from developedmarkets, we used a more emic approach and looked for specific determinants of firmsfrom BRIC countries. Based on an exploratory and qualitative approach, case studies ofeight companies were conducted. Available secondary data were complemented withpersonal interviews to get a deeper insight into the determinants of outward FDI fromBRIC country firms.

A major theoretical contribution of our study is the identification of severaldeterminants of outward FDI that are not adequately reflected in conventionalinternationalization theories. For example, with regard to location choice, the case

Outward FDIfrom BRIC

countries

23

studies reveal that firms from BRIC countries rarely follow the classical psychic distancechain proposed by Johanson and Vahlne (1977). BRIC country firms enter psychicallydistant countries first, while going to psychically closer countries shortly thereafter orpursuing both paths simultaneously. One of our interview partners mentioned that theyoften ask themselves “where do I have to go to in order to sustain my status and toensure future growth and succeed in the long run”, instead of learning from a gradualexpansion.

One reason for this preference for developed countries as locations for their firstinternationalization steps is that BRIC country firms often seek access to resourceswhich are different from those relevant for firms from developed countries. Therefore,with regard to the eclectic paradigm (Dunning, 1980), it can be argued that the latteroften invest abroad to exploit low labour and production costs, while BRIC country firmsperceive other location advantages such as the access to technology, managementknow-how and brand names as more important. Another important result in this contextrefers to ownership advantages. Most BRIC country firms face several disadvantages interms of patent, technology and management know-how and mainly look for theseresources when expanding abroad. Thus, the internationalization of BRIC country firmsis motivated by asset acquisition and augmentation rather than by asset-exploitation(Dunning, 2006). As a consequence, they predominantly internationalize in the form offorward integration, especially when investing in developed countries where valuableassets and know-how are available. In many cases they prefer cooperating with localfirms over internationalization of foreign operations. One reason for the preference forpartnerships is “to reduce the high level of risk involved in their leveraged strategies”(Mathews, 2006, p. 17).

Moreover, our study contributes to the analysis of outward FDI of BRIC countryfirms from an institutional perspective. Institutional theory suggests that coercivepressure may initiate FDI (Di Maggio and Powell, 1983; Francis et al., 2009). In the caseof BRIC country firms, coercive pressure is mainly exerted by fierce competition inthe home market and – particularly in the cases of the former communist countriesChina and Russia – by strong government support in industries that are regarded asstrategically important. Thus, our study underlines the relevance of institutionalfactors for FDI decisions of BRIC country firms. However, while outward FDI of firmsfrom developed countries is often regarded as an escape response to home countryinstitutional constraints (Witt and Lewin, 2007), several BRIC country firms in ourstudy receive considerable incentives to invest abroad.

From a practitioner’s point of view, this study enhances our knowledge of thedeterminants of outward FDI from BRIC countries. For example, firms from BRICcountries which have not yet invested abroad may better understand the factors thatinfluence the internationalization process of their competitors and may evaluate therelevance of these factors for their own FDI decisions. Moreover, competitors fromdeveloped countries may better understand why firms from BRIC countries go abroadand what their most relevant target countries are. Since FDI often takes place in the formof M&A, this might be particularly important for companies in developed countries thateither look for a foreign partner or fear the risk of being acquired by one. Similarly, theemployees of acquired firms may better understand the motives of acquirers from BRICcountries. Our case studies reveal that a main determinant of FDI decisions is to getaccess to technology and management know-how, i.e. to advanced resources that

IJOEM7,1

24

are often deeply embedded in the acquired firms. Thus, it is likely that the human capitalof these firms will be sustained, with radical restructurings and large-scale layoffs beingaverted.

A limitation of the study is the relatively small number of cases (8). Although theyhave been selected according to the principle of maximal contrast, they are unableto cover all possible determinants of FDI. Our sample, for example, contains only largecompanies, while the specific conditions of small- and medium-sized companies are notconsidered. Moreover, many important sectors such as the automotive andpharmaceutical industries are not covered in our sample.

An avenue for future research is the use of macro data to analyze FDI flows fromBRIC countries. While previous studies (Buckley et al., 2007; Kumar, 2007) did this forsingle countries, comparative studies could further analyze the similarities anddifferences between BRIC countries. However, the availability of reliable data is likelyto be problematic. For example, the annual World Investment Report containsaggregated information about source countries and receiving countries of FDI, but nodetailed statistics of the directions of FDI inflows and outflows. Although thisinformation might be obtained from the statistical offices of the particular countries,the problem of varying definitions and reporting periods remains. FDI figures forChina tend to be over optimistic, while in India and Russia they are seem to err on thelow side (Bajpai and Dasgupta, 2004; Liuhto and Jumpponen, 2002).

Finally, future studies should involve researchers from both BRIC and OECDcountries. Our analysis of previous studies revealed a cultural bias in the evaluation ofcertain determinants of FDI. For example, authors from developed countries often referto the government as an important factor of outward FDI in China and Russia, whileauthors from these countries only rarely mention this factor. Similarly, the impact ofcultural determinants such as guanxi in China or family relationships in India may beperceived in different ways (Child and Rodrigues, 2005; Mathews, 2006; Luo and Rui,2009). Thus, discussions within culturally mixed teams of researchers might reduce therisk of over- or underestimating certain aspects and contribute to a more objectiveanalysis of the determinants of outward FDI of firms from BRIC countries. In thissense, studies about FDI from BRIC countries should be further developed with respectto different cultural backgrounds.

References

Alon, I. and McIntyre, J. (Eds) (2008), Globalization of Chinese Enterprises, Palgrave Macmillan,New York, NY.

Aulakh, P.S. (2007), “Emerging multinationals form developing economies: motivations, pathsand performance”, Journal of International Management, Vol. 13 No. 3, pp. 235-40.

Bajpai, N. and Dasgupta, N. (2004), “FDI to China and India: the definitional differences”,The Hindu Business Line, May 15.

Banco Central do Brasil (2007), “Capitais brasileiros no exterior”, available at: www.bcb.gov.br(accessed 25 July 2007).

Barney, J.B. (1991), “Firm resources and sustained competitive advantages”, Journal ofManagement, Vol. 17, pp. 99-120.

Bazeley, P. (2007), Qualitative Data Analysis with NVivo, Sage, London.

Outward FDIfrom BRIC

countries

25

Bloningen, B.A. (2005), “A review of the empirical literature on FDI determinants”, AtlanticEconomic Journal, Vol. 33, pp. 383-403.

Buckley, P., Clegg, L.J., Cross, A.R., Xin, L., Voss, H. and Ping, Z. (2007), “The determinants ofChinese outward foreign direct investment”, Journal of International Business Studies,Vol. 38 No. 4, pp. 499-518.

Busch, A. (2007), “Jung und hungrig”, Wirtschaftswoche, Vol. 5, 29 January, p. 45.

Bush, J. (2005), “Russia: the bank that roars”, Businessweek, 28 March, available at: http://businessweek.com/magazine/content/05_13/b3926157_mz035.htm (accessed 10 October 2009).

Chaddad, F.R. (2003), “CVRD Mining by 2010: redrawing firm boundaries for 3x market cap”,European Case Clearing House 303-003-1.

Chen, H. and Chen, T.J. (1998), “Network linkages and location choice in foreign directinvestment”, Journal of International Business Studies, Vol. 29 No. 3, pp. 445-68.

Child, J. and Rodrigues, S.B. (2005), “The internationalization of Chinese firms: a case fortheoretical extension?”, Management and Organization Review, Vol. 1, pp. 381-410.

Crowley, C., Harre, R. and Tagg, C. (2002), “Qualitative research and computing: methodologicalissues and practices in using QSR NVivo and NUD *IST”, International Journal of SocialResearch Methodology, Vol. 5 No. 3, pp. 193-7.

Cuervo-Cazurra, A. (2007), “Sequence of value-added activities in the multinationalization ofdeveloping country firms”, Journal of International Management, Vol. 13 No. 3, pp. 258-77.

CVRD (2009), available at: www.cvrd.com.br (accessed 28 August 2009).

Cyrino, A.B., de Miranda Oliveira, M. and de Rezende, P.E. (2005), “Global players from emergingmarkets: evidences form the internationalization process of the largest Brazilian firms”,paper presented at the Academy of International Business, Montreal.

Deng, P. (2008), “Resources, capability and outbound FDI from Chineses companies”, in Alon, I.and McIntyre, J.R. (Eds), Globalization of Chinese Enterprises, Palgrave Macmillan,Basingstoke, pp. 17-30.

Deng, P. (2009), “Why do Chinese firms tend to acquire strategic assets in internationalexpansion”, Journal of World Business, Vol. 44 No. 1, pp. 74-84.

Di Maggio, P.J. and Powell, W.W. (1983), “The iron cage revisited: institutional isomorphism andcollective rationality in organizational fields”, American Sociological Review, Vol. 48 No. 2,pp. 147-60.

Dorfs, J. and Kewes, T. (2006), “Deutsches Nylon, indisches Geld”, Handelsblatt, 21 July,available at: http://handelsblatt.com/unternehmen/industrie/_b¼1109367,_p¼39,_t¼ftprint;printpage

Douma, S., George, R. and Kabir, R. (2006), “Foreign and domestic ownership, business groups,and firm performance: evidence from a large emerging market”, Strategic ManagementJournal, Vol. 27, pp. 637-57.

Dunning, J.H. (1980), “Towards an eclectic theory of international production: some empiricaltests”, Journal of International Business Studies, Vol. 11 No. 1, pp. 9-31.

Dunning, J.H. (2006), “Comment on dragon multinationals: new players in the 21st centuryglobalization”, Asia Pacific Management, Vol. 23, pp. 139-41.

(The) Economist Business Latin America (2006), “Brazil: CVRD goes global”, The EconomistBusiness Latin America, 27 November.

Eisenhardt, K.M. (1989), “Building theories from case study research”, Academy of ManagementReview, Vol. 14, pp. 532-50.

IJOEM7,1

26

Eisenhard, K.M. (1991), “Better stories and better constructs: the case for rigor and comparativelogic”, Academy of Management Review, Vol. 14, pp. 532-50.

Eisenhardt, K.M. and Graebner, M.E. (2007), “Theory building from cases: opportunities andchallenges”, Academy of Management Journal, Vol. 50, pp. 25-32.

Elango, B. and Pattnaik, C. (2007), “Building capabilities for international operations throughnetworks: a study of Indian firms”, Journal of International Business Studies, Vol. 38 No. 4,pp. 541-55.

Escobar, P. (2005), “Selling China to the world”, Asia Times Online, 5 January, available at: http://atimes.com/atimes/others/sinoroving.html (accessed 23 July 2009).

Feng, S. and Elfring, J. (2004), The Legend behind Lenovo: The Chinese IT Company that Dares toSucceed, Asia, Singapore.

Flash, M., Story, J. and Burnham, J. (2007), “The takeover of Arcelor by Mittal Steel. Change in amature global industry”, European Case Clearing House 307-145-1.

Francis, J., Zheng, C. and Mukherji, A. (2009), “An institutional perspective on foreign directinvestment. A multi-level framework”, Management International Review, No. 49,pp. 565-83.

Garg, M. and Delios, A. (2007), “Survival of the foreign subsidiaries of TMNCs: the influence ofbusiness group affiliation”, Journal of International Management, Vol. 13 No. 3, pp. 278-95.

Gazprom (2009), available at: www.gazprom.com (accessed 25 July 2009).

Ghemawat, P. and Hout, T.M. (2006), “Haier’s US Refrigerator Strategy 2005”, Harvard BusinessSchool Case 9-705-475.

Ghosal, S., Piramal, G. and Budhiraja, S. (2002), World Class in India. A Casebook of Companies inTransition, Penguin Books, New Delhi.

Glaser, B.G. and Strauss, A.L. (2008), The Discovery of Grounded Theory, Huber, Bern et al.

Goldman Sachs (2003), “Global Economics Paper No. 99”, available at: http://goldmansachs.com/ideas/brics/book/99-dreaming.pdf (accessed 23 July 2009).

Haier (2006), Annual Report 2006, available at: www.haier.com (accessed 25 July 2009).

Haier (2009), available at: www.haier.com (accessed 25 July 2009).

Hamm, S. (2007), Bangalore Tiger. How Indian Tech Upstart Wipro is Rewriting the Rules ofGlobal Competition, Tata McGraw-Hill, New Delhi.

Heinrich, A. (2003), “Internationalization of Russia’s Gazprom”, Journal for East EuropeanManagement Studies, Vol. 8 No. 1, pp. 46-66.

Heinrich, A. (2005), “Russian companies in old EU Member States: the case of Germany”, Journalof East-West Business, Vol. 11, pp. 41-59.

Hoskisson, R.E., Eden, L., Lau, C.M. and Wright, M. (2000), “Strategy in emerging economies”,Academy of Management Journal, Vol. 43 No. 3, pp. 249-67.

Iyengar, J. (2004), “The need for foreign acquisitions”, The Asia Times Online, available at: www.atimes.com/atimes/China/FL09Ad04.html (accessed 25 July 2009).

Jinsheng, J. and Ye, S.X. (2003), The Haier Way. The Making of a Chinese Business Leader and aGlobal Brand, Homa & Sekey Books, Dumont, NJ.

Johanson, J. and Vahlne, J.E. (1977), “The internationalization process of the firm – a model ofknowledge development and increasing foreign market commitments”, Journal ofInternational Business Studies, Vol. 8 No. 1, pp. 23-32.

Kalotay, K. (2005), “Outward foreign direct investment from Russia in a global context”, Journalof East-West Business, Vol. 11, pp. 9-22.

Outward FDIfrom BRIC

countries

27

Kreppel, H. and Holtbrugge, D. (2008), “The internationalisation strategy of Wipro in Europe”,in Kazmi, A. (Ed.), Strategic Management & Business Policy, 3rd ed., McGraw-Hill,New Delhi, pp. 649-56.

Kumar, N. (2007), “Emerging TNCs: trends, patterns and determinants of outward FDI by Indianenterprises”, Transnational Corporations, Vol. 16 No. 1, pp. 1-26.

Lamnek, S. (2005), Qualitative Sozialforschung, 4th ed., Beltz, Weinheim.

Lenovo (2009), available at: www.lenovo.com (accessed 25 July).

Li, P.P. (2007), “Toward an integrated theory of multinational evolution: the evidence of Chinesemultinational enterprises as latecomers”, Journal of International Management, Vol. 13,pp. 296-318.

Lien, Y.-C., Piesse, J., Strange, R. and Filatotchev, I. (2005), “The role of corporate governance inFDI decisions: evidence from Taiwan”, International Business Review, Vol. 14 No. 6,pp. 739-73.

Ling, Z. (2006), The Lenovo Affair. The Growth of China’s Computer Giant and Its Takeover ofIBM-PC, Wiley (Asia), Singapore.

Liu, C.Z. (2007), “Lenovo: an example of globalization of Chinese enterprises”, Journal ofInternational Business Studies, Vol. 38 No. 4, pp. 573-7.

Liu, H. and Li, K. (2002), “Strategic implications of emerging Chinese giants: the Haier casestudy”, European Management Journal, Vol. 20, pp. 699-706.

Liuhto, K. and Jumpponen, J. (2002), “The internationalization boom of Russian corporations –studies of Russian banks, energy and metal companies”, Research Report No. 135,Department of Industrial Engineering and Management, Lappeenranta University ofTechnology, Lappeenranta.

Liuhto, K. and Jumpponen, J. (2003), “The Russian eagle has landed abroad – evidenceconcerning the foreign operations of Russia’s 100 biggest exporters and banks”, ResearchReport No. 141, Department of Industrial Engineering and Management, LappeenrantaUniversity of Technology, Lappeenranta.

Lopez-Claros, A., Schwab, K. and Porter, M.E. (2006), The Global Competitiveness Report2006-2007, World Economic Forum, New York, NY.

Luo, Y. and Rui, H. (2009), “An ambidexterity perspective toward multinational enterprises fromemerging economies”, The Academy of Management Perspectives, Vol. 23 No. 49, pp. 49-70.

Luo, Y. and Tung, R.L. (2007), “International expansion of emerging market enterprises:a springboard perspective”, Journal of International Business Studies, Vol. 38, pp. 481-98.

Luo, Y., Xue, Q. and Han, B. (2010), “How emerging market governments promote outward FDI:experience in China”, Journal of World Business, Vol. 45 No. 11, pp. 68-79.

Makino, S., Lau, C.M. and Yeh, R.S. (2002), “Asset-exploitation versus asset-seeking: implicationsfor location choice of foreign direct investment from newly industrialized economies”,Journal of International Business Studies, Vol. 33 No. 3, pp. 403-21.

Mathews, J.A. (2006), “Dragon multinationals: new players in the 21st century globalization”,Asia Pacific Journal of Management, Vol. 23, pp. 5-27.

Palepu, K., Khanna, T. and Vargas, I. (2005), “Haier: taking a Chinese company global”,Harvard Business School Case 706-401, Harvard Business School, Boston, MA.

Porter, M.E., Sachs, J.D., Cornelius, P.K., McArthur, J.W. and Schwab, K. (2002), The GlobalCompetitiveness Report 2001-2002, World Economic Forum, New York, NY.

Reliance (2009), available at: www.ril.com (accessed 25 July).

IJOEM7,1

28

Roy, S. (2005), Made in India. A Study of Emerging Competitiveness, Tata McGraw-Hill,New Delhi.

Ruimin, Z. (2007), “Raising Haier”, Harvard Business Review, February, pp. 141-6.

Rybak, A. (2007), “Indische Welteroberer”, Financial Times Deutschland, 4 April.

Schmid, K.P. (2006), “Willkommen in Deutschland?”, Die Zeit, Vol. 48, 23 November.

Sinha, A. (2007), “Tata Steel vs. CSN: the battle for Corus”, European Case Clearing House307-225-1.

Srinivas, A. (2009), Ambani vs. Ambani. Storms in the Wind, Roli Books, New Delhi.

Stern, J.P. (2005), The Future of Russian Gas and Gazprom, Oxford University Press, Oxford.

Thadamalla, J. and Hotchandani, S. (2007), “Global aspirations of Tata”, European Case ClearingHouse 307-073-1.

Tiwari, R. and Herstatt, C. (2009), “The emergence of Indian multinationals. An empirical studyof motives, status quo and trends of Indian investments in Germany”, Working PaperNo. 56, Institute of Technology and Innovation Management, Hamburg University ofTechnology, Hamburg.

Trevira (2007), available at: www.trevira.de (accessed 12 December 2009).

UNCTAD (2004), “Outward FDI form Brazil: poised to take off?”, Occasional Note, 7 December,available at: www.unctad.org/en/docs/iteiia200416_en.pdf (accessed 25 July 2009).

UNCTAD (2005), World Investment Report 2005, UNCTAD, Geneva.

UNCTAD (2006), World Investment Report 2006, UNCTAD, Geneva.

UNCTAD (2008), World Investment Report 2008, UNCTAD, Geneva.

UNCTAD (2009), World Investment Report 2009, UNCTAD, Geneva.

Vahtra, P. and Liuhto, K. (2005), “An overview of Russia’s largest corporations abroad”,Journal of East-West Business, Vol. 11 Nos 3/4, pp. 23-40.

Vahtra, P. and Liuhto, K. (n.d.), “Russian corporations abroad – seeking profits, leverage ofrefuge?”, available at: www.tukkk.fi/pei/NewEurope/SessionA1/Vahtra_Liuhto.pdf(accessed 25 July 2009).

van Agtmael, A. (2007), The Emerging Markets Century: How a Need Breed of World-classCompanies is Overtaking the World, The Free Press, New York, NY.

Venkatesh, T., Yadav, H. and Chakraverty, S. (2006), “Gazprom. The leading energy giant goingglobal”, European Case Clearing House 306-542-1.

VTB (2009), available at: www.vtb.ru (accessed 25 July 25).

WEG (2009), available at: www.weg.com.br (accessed 14 July).

Wipro (2006), “Wipro US analysts/investors interaction session NYSE”, available at: www.wipro.com/investors/ (accessed 12 August 2009).

Wipro (2009), available at: www.wipro.com (accessed 12 August).

Witt, M.A. and Lewin, A.Y. (2007), “Outward foreign direct investment as escape response tohome country institutional constraints”, Journal of International Business Studies, Vol. 38No. 4, pp. 579-94.

Yang, X. and Stoltenberg, C. (2008), “Growth of made-in-China multinationals: an institutionaland historical perspective”, in Alon, I. and McIntyre, J.R. (Eds), Globalization of ChineseEnterprises, Palgrave Macmillan, Basingstoke, pp. 61-76.

Yin, R.K. (2004), Case Study Research: Design and Methods, 3rd ed., Sage, Thousand Oaks, CA.

Outward FDIfrom BRIC

countries

29

Yiu, D.W., Lau, C.M. and Bruton, G.D. (2007), “International venturing by emerging economyfirms: the effects of firms capabilities, home country networks, and corporateentrepreneurship”, Journal of International Business Studies, Vol. 38 No. 4, pp. 519-40.

Young, A. and Blackmore, D. (2007), “Dataquest insight: India-centric service providers continueto impact the IT service market”, available at: www.gartner.com (accessed 13 March 2010).

About the authorsDirk Holtbrugge (PhD and Habilitation, University of Dortmund) is Professor of InternationalManagement at the University of Erlangen-Nuremberg, Germany. His research interests includeinternational management, human resource management, and management in Asia and EasternEurope. He has published eight books and more than 70 journal articles.

Heidi Kreppel studied International Business at the University of Erlangen-Nuremberg and isnow a Senior Research Assistant and PhD student at the Chair of International Management atthe University of Erlangen-Nuremberg. Her main research areas are outward FDI fromcompanies located in BRIC countries, perceived attractiveness of BRIC country companies andintercultural management. Heidi Kreppel is the corresponding author and can be contacted at:heidi.kreppel@wiso.uni-erlangen.de

IJOEM7,1

30

To purchase reprints of this article please e-mail: reprints@emeraldinsight.comOr visit our web site for further details: www.emeraldinsight.com/reprints