Individual Article Review Report - MGT521 - Business Development

This report is an individual assignment reviewing the article "Knowledge Seeking and Outward FDI of Emerging Market Firms: The Moderating Effect of Inward FDI" by Li, Li, and Shapiro, published in the Global Strategy Journal in 2012. The review explores the article's core concepts, focusing on how inward FDI influences emerging market multinational enterprises (EMNEs) in their knowledge-seeking and globalization strategies. The report analyzes the article's arguments, which center on how EMNEs can leverage technological advantages and skill spillovers from inward FDI to enhance their competitive edge and move towards high-value manufacturing. The review also discusses the study's recommendations, implications, and potential utility and drawbacks within the United Arab Emirates context, considering the limited global knowledge and experience of EMNEs in comparison to established MNEs. The assignment also covers the methodology used by the authors in testing their arguments using the Cox framework to evaluate the implication of comparable technological advantages of an incumbent country on a Chinese organization in global investments, physical resource searching and market analysis.

Article Review 1
INDIVIDUAL ASSIGNMENT REPORT (ARTICLE REVIEW)
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Professor’s Name
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November 6, 2018

Article Review 2
Introduction
In the global business world, studying if the host country’s organizational-centered technology
enhances the propensity of the Emerging Market Multinational Enterprises (EMNEs) is
necessary. In that case, this paper is a review of an article titled: Knowledge Seeking and
Outward FDI of Emerging Market Firms: The Moderating Effect of Inward FDI. The authors of
this article are Jing Li, Yong Li, and Daniel Shapiro. The volume number is 2 whereas the issue
number is 4. The report was published in 2012 under the Global Strategy Journal, as the name of
the journal.
Concepts & Issues
The fundamental concepts in the article under review is the explicit consideration of alternative
means for emerging organizations to obtain knowledge. Specifically, the article postulates that
internal FDI in EMNEs’ local markets proposes a strategic framework for emerging
organizations to improvement on technological activities. The literature on FDI spillover
advocates that international companies usually deliver comparably enhanced initiatives
considering their investments in developing areas. Resultantly, inward FDI formulates skill
spillovers that are beneficial to local companies using demonstrative linkages with clients,
effects, competitors, suppliers and the mobility of skilled personnel.
Li, Li and Shapiro (2012), address two fundamental and underexplored issues: does EMNE have
the propensity to globalize to other nations using technological resources; and the means why the
inward FDI, in EMNE local markers, through the generation of skill spillover, affects EMNE’s
technological-searching over the framework of FDI’s decisions. The article's arguments start
with the analysis of EMNEs penetrating to the international market and how these firms can
catch-up with established MNEs concerning technological abilities to enhance their competitive
advantages. In that regard, the authors argue that EMNEs are searching for strategic measures to
change from focusing on low value-centered activities to concentrating on high value-centered
manufacturing activities using Research and Development (R&D).
Article’s Main Focus
The article focuses on if a host country’s firm-centered technological advantages enhance
EMNEs’ propensity to globalize into a host market. The authors present an excellent argument
by exploring the inward FDI in the EMNE local market through the formulation of skill
spillovers in specific global markets hence minimizing EMNEs' tendency to globalize using a
skill search. The article’s discussion was centered on the application of longitudinal information
on global investment actions of Chinese production organizations. The authors denoted and
supported their hypotheses by evaluating underlying exterior FDI motives. Hence, the article
presents a discussion of the research's implication and practice on emergent organizations.
Generally, the framework of the discussion was tested using data sets from global equity
investment of Chinese organizations in the production sector dating from 1990 to 2009.
The research also focused its arguments using the Cox framework to evaluate the implication of
comparable technological advantages of an incumbent country on a Chinese organization in
global investments, physical resource searching and market analysis. In the methodology section,
the authors argue that they were able to control the Chinese organization’s experience on

Article Review 3
investment in the incumbent nation and the firm’s collaboration status with host organizations in
China. Applying the data in SDC’s database, the authors calculated the overall experience of
organizations in China in the host nation as the organization’s value of equity joint venture in the
host country over the last five years.
Recommendations & Implications of the Study
This review provides supplementary information about the effect of inner FDI which to certain
degree gratifies China's MNE's motivation in seeking higher hi-tech data and facts. Additionally,
the flow of skills within the FDI does not wholly account for the skills and knowledge acquired
from other FDI external sources. Specifically, it’s thus suggested that in an event where there
exists a technological opening surrounding the industrialized market organizations and that of the
EMNE within the local markets, a steady depreciation should result to restrictions in the learning
prospects. This will lead to insufficiency in the knowledge supply within the FDI making it
possible for the EMNEs prioritize on trailing various technological purchases with the use of an
outward FDI approach. This research topic comprises of significant effect on the global business
approach as a whole.
Additionally, the company should be in a position of weighing up the chances of safeguarding
the various technical assets through the close relation with international companies, which are
working in the residential marketplace. Acquiring technological advancements in the globe can
be very daunting for developing businesses because of low global knowledge and inadequate
capability of extending various systems with other superior developed companies. According to
the researcher's analysis, there exists a comparable linkage between the technology available for
the MNEs, while there was a partial supply of resources within the technology laggard MNE's
which was useful in identifying common connections. Consequently, it will result to having great
concentration in assembling skills and knowledge from different nations. It creates a feasible
process for the laggard EMNE when using different inward FDI learning which highly increases
the technological abilities.
Utility & Drawback/Demerits in the United Arab Emirates
The article writers contended about the effect of the internal FDI, which produces negligible
exhibit impacts in businesses in the United Arab Emirates (UAE), which creates more
opportunities for local enterprises essentially through rivalry impacts. The EMNEs will, in
general, have restrictions on global knowledge to take part in comprehensive innovation plans
proficiently; urbanized MNEs marketplace generally will be more knowledgeable and productive
in the universal innovation process given their initial status in global deals. However, internal
FDI probably leads to a differentiated impact of external FDI on EMNEs choices due: EMNEs'
general fall after improved firms in mechanical capacities; and internal FDI within the improved
marketplace providing plenteous educational prospects to developing business to get up to the
speed of trending innovation practices. Through differentiation, innovation openings within the
developing markets will be substantially low, and internal FDI in these markets will probably
generate constrained learning openings. Additionally, the EMNEs will, in general, have
restricted global experience to effectively take part in international innovation processes, while
other improved MNEs markets will, in general, be knowledgeable and productive in global
innovation plans as a result of their initial position in the universal outlay.

Article Review 4
Reference
Li, J., Li, Y. and Shapiro, D. (2012). Knowledge Seeking and Outward FDI of Emerging Market
Firms: The Moderating Effect of Inward FDI. Global Strategy Journal, 2(4), pp.277-295.