Internationalization and domestic political support

a differentiation of R&D-related foreign and domestic firms in Turkey

authored by: Timo Kleiner-Schaefer, Ekrem Tatoglu, Ingo Liefner
Abstract: Purpose: This paper contributes insights into how different firm types in the emerging market (EM) of Turkey respond to upgrading pressures in terms of internationalization and the usage of domestic political support. It seeks to highlight how the usage of and the responses to different strategies, connections and policy instruments vary with firm types. Design/methodology/approach: Binary logistic regression analysis is used to differentiate and identify characteristics of firms regarding market-seeking strategies and their usage of institutional and financial support. The analysis is based on survey data from firms located in the metro-region of Istanbul: advanced market multinational enterprises (AMNEs), Turkish MNEs (TMNEs) and domestic Turkish firms (DTFs). Findings: Different types of firms within the population of innovative firms in the EM setting of Turkey show significant variety regarding the usage of and the responses to key factors affecting internationalization. AMNEs particularly benefit from investment and export incentives as well as from establishing political connections in Turkey. DTFs significantly use tax incentives and primarily seek advanced markets. TMNEs particularly benefit from investment and export incentives and prefer to target advanced markets. Research limitations/implications: Using Turkey as a single-country setting is a limitation to the generalizability of the results. Future studies could use more cases of AMNEs to compare different countries of origin. In addition, the intended focus on R&D-related firms produces specific outcomes for such companies. Practical implications: National and regional policies need to pursue different strategies for the surveyed groups of firms to attract and maintain foreign direct investments (FDIs) of AMNEs as well as to support outward FDIs of domestic firms and EM MNEs. In particular, policies for market entries and knowledge sourcing in advanced markets are becoming a crucial factor for EM firms in overcoming a shortage of resources at home. Originality/value: This paper’s findings challenge existing theories such as the concept of psychic distance or liabilities of foreignness, which do not always provide an adequate explanation for internationalization activities of EM firms. In addition, it is highly relevant to apply an eclectic or multidimensional concept when conducting research in EMs in order to capture the interrelated constructs of upgrading, internationalization and political support.
Organisation(s): Institute of Economic and Human Geography
External Organisation(s): Philipps-Universität Marburg
Gulf University for Science and Technology
İbn Haldun University (IHU)
Type: Article
Journal: International Journal of Emerging Markets
Volume: 19
Pages: 624-648
No. of pages: 25
ISSN: 1746-8809
Publication date: 21.02.2024
Publication status: Published
Peer reviewed: Yes
ASJC Scopus subject areas: Business and International Management, General Business,Management and Accounting
Electronic version(s): https://hdl.handle.net/20.500.12154/1869 (Access: Open)
https://doi.org/10.1108/IJOEM-07-2019-0502 (Access: Closed)

BibTeX

@article{f5b3692eb50942439babf6916bf5e85d,
title = "Internationalization and domestic political support: a differentiation of R&D-related foreign and domestic firms in Turkey",
abstract = "Purpose: This paper contributes insights into how different firm types in the emerging market (EM) of Turkey respond to upgrading pressures in terms of internationalization and the usage of domestic political support. It seeks to highlight how the usage of and the responses to different strategies, connections and policy instruments vary with firm types. Design/methodology/approach: Binary logistic regression analysis is used to differentiate and identify characteristics of firms regarding market-seeking strategies and their usage of institutional and financial support. The analysis is based on survey data from firms located in the metro-region of Istanbul: advanced market multinational enterprises (AMNEs), Turkish MNEs (TMNEs) and domestic Turkish firms (DTFs). Findings: Different types of firms within the population of innovative firms in the EM setting of Turkey show significant variety regarding the usage of and the responses to key factors affecting internationalization. AMNEs particularly benefit from investment and export incentives as well as from establishing political connections in Turkey. DTFs significantly use tax incentives and primarily seek advanced markets. TMNEs particularly benefit from investment and export incentives and prefer to target advanced markets. Research limitations/implications: Using Turkey as a single-country setting is a limitation to the generalizability of the results. Future studies could use more cases of AMNEs to compare different countries of origin. In addition, the intended focus on R&D-related firms produces specific outcomes for such companies. Practical implications: National and regional policies need to pursue different strategies for the surveyed groups of firms to attract and maintain foreign direct investments (FDIs) of AMNEs as well as to support outward FDIs of domestic firms and EM MNEs. In particular, policies for market entries and knowledge sourcing in advanced markets are becoming a crucial factor for EM firms in overcoming a shortage of resources at home. Originality/value: This paper{\textquoteright}s findings challenge existing theories such as the concept of psychic distance or liabilities of foreignness, which do not always provide an adequate explanation for internationalization activities of EM firms. In addition, it is highly relevant to apply an eclectic or multidimensional concept when conducting research in EMs in order to capture the interrelated constructs of upgrading, internationalization and political support.",
keywords = "Domestic firms, Emerging markets, Innovation, Institutions, Internationalization, Multinational enterprises, Political support, Turkey",
author = "Timo Kleiner-Schaefer and Ekrem Tatoglu and Ingo Liefner",
note = "Funding Information: The authors greatly appreciate financial support for research stays in Turkey from the German Academic Exchange Service. Many thanks to the anonymous reviewers for their very helpful comments and suggestions. Furthermore, thanks to our student assistant Jana Almstedt for data cleaning. Last but not least, thanks to Zo{\"e} Vercelli and Kerry Jago for language editing. Funding Information: (financial support). “Investment and export incentives” are more important for both AMNEs and TMNEs than for DTFs. ",
year = "2024",
month = feb,
day = "21",
doi = "10.1108/IJOEM-07-2019-0502",
language = "English",
volume = "19",
pages = "624--648",
journal = "International Journal of Emerging Markets",
issn = "1746-8809",
publisher = "Emerald Group Publishing Ltd.",
number = "3",
}