- “Institutional Voids” are markets conditions that support the profitability of business models in developed economies but are not found in emerging markets. These institutional voids appear in different areas: products (e.g. market research information, distribution networks, after- sale support); Labor (e.g. education infrastructure, training, talent availability); Capital (e.g. reliability of financial data, rating agencies); and Macro Context (private property rights, contract enforcement).
- When faced with these institutional voids, multinational have various strategic choices to make: Replicate or adapt? Compete alone or collaborate? Accept or attempt to change the market context? And enter, wait or exit?
- A multinational company may attempt to fill one of the institution voids and play a market intermediary role to achieve two goals: improve the business environment and develop a new revenue source.
- Multinational companies naturally compete well in the top, more globalized segment of the market. As they go down market, local players have stronger market advantage
- The book also addresses the response of the local companies, or “emerging giants”, and how compete in their home turf and abroad.
- The authors provide practical analytical tools and examples for the various concepts presented in the book.
Overall, the book is a good read for managers selling abroad, especially for those with strategic, planning and advisory roles who require a solid framework to evaluate business opportunities in emerging country.