Tuesday, January 3, 2017

Strategies for MNCs Engaging with Start-ups in Emerging Markets

For large global companies, forging effective partnerships with high-potential start-ups is easier said than done. The very traits that make such start-ups potentially complementary as partners also make it difficult for large companies to engage with them in the first place. Multinational corporations often struggle event to identify promising potential start-up partners, while start-ups find it difficult to identify and reach the relevant decision makers within the often-confusing hierarchies of giant multinationals. The challenge is even greater for both sides in emerging markets.

To understand how multinational companies have partnered successfully with start-ups in emerging markets, CEIBS Associate Professor of International Business & Strategy Shameen Prashantham has co-authored a research study in three major emerging market economies: India, China and South Africa. The study focussed on non-equity partnering through start-up engagement programmes such as Microsoft’s BizSpark, IBM’s Global Entrepreneur Programme, and SAP’s Start-up Focus programme.

The research uncovered four key factors that multinational companies confront in such partnerships in emerging markets, and corresponding strategies that can help multinationals engage with start-ups in  emerging markets. The challenges and the strategies to address them are as follows:


Immature Entrepreneurial Ecosystem → Compensate for Deficiencies

Appetite for Entrepreneurship → Commit Resources to tapping the Entrepreneurial Energy

Outsider Status of Western Multinationals → Work with Local Groups

Access to Novel Innovations → Co-innovate with Start-ups

The findings also highlight the importance for Western multinationals to recognize differences among emerging markets. Different emerging markets have distinct national priorities, regulations, and differing scales of economic activity and entrepreneurship which will affect the strategies of multinationals. These things must also be taken into account if multinational companies are to succeed in creating mutual value for themselves and their start-up partners.

The results of the study are featured in the Winter 2017 edition of MIT Sloan Management Review which Prof. Prashantham co-authored with Prof. George S. Yip of Imperial College Business School in London. Read the article here.

Image courtesy of Sira Anamwong at FreeDigitalPhotos.net


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