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Strategic Entrepreneurship in a Globalising Economy

Volume 18, Number 3 Article by J Ramachandran, Sourav Mukherji and Mukesh Sud September, 2006

Strategic Entrepreneurship in a Globalising Economy: Evidence from Emerging Economies :

While firms from emerging economies are now competing in global markets, the unique challenges they face in the form of resource constraints, adverse perceptions, powerful incumbents and lack of business models that can be emulated, make their internationalisation efforts much riskier than those undertaken by firms from developed economies. Based on their case study research, J Ramachandran, Sourav Mukherji and Mukesh Sud analyse the successful internationalisation efforts of two firms from the Indian pharmaceutical industry, Ranbaxy Laboratories and Dr Reddy’s Laboratory (DRL).

The authors propose that firms need to exhibit entrepreneurial behaviour while entering and competing in highly advanced global markets. Specifically, firms were found to adopt a strategy of ‘fund as you go’ to overcome resource constraints over and above the model of ‘learn as you go’, as suggested by incremental models of internationalisation. Contrasting the systematic nature of Ranbaxy’s internationalisation with the entrepreneurial nature of DRL’s, they conclude that while opportunity seeking and risk laden entrepreneurial behaviour is necessary for firms from emerging markets, such behaviour is not sufficient for them to create sustainable positions of competitive advantage in the markets of the developed world. That involves designing the right organisational structure, implementing processes and policies, planning and sequencing of activities and mitigating the varied kinds of risks that are inherent in the process of internationalisation. That is, entrepreneurial behaviour must be complemented by strategic behaviour. Strategic entrepreneurship would create sustainable competitive positions in advanced international markets. This study contributes to theory building pertaining to internationalisation efforts of firms from emerging markets – a relatively unexplored domain of international business.

Reprint No 06306b