The Changing Landscape of Multinational Expansion

In today's globalized world, multinational enterprises (MNEs) increasingly seek growth opportunities in emerging markets. As these companies navigate uncharted territories, they face a complex array of challenges that require a fundamental shift in their approach to stakeholder management and corporate strategies.

In the article “Emerging market multinationals’ embeddedness in Global South countries: an empirical study of Chinese MNEs in Peru” (Critical Perspectives on International Business, 2024), co-authored with Dominique Mazé (Brest Business School) and Jorge Alcaraz (Universidad de Monterrey), we study the experience of Chinese mining companies in Peru is a powerful example of the evolving dynamics that MNEs must contend with as they expand their operations in emerging markets. Traditionally, MNEs have relied on high-level political lobbying and top-down approaches to stakeholder engagement, often neglecting the importance of building strong relationships with local communities.

However, as demonstrated by the case of Chinese mining companies in Peru, this approach is no longer sufficient. Local stakeholders, empowered by the rise of "translocal governance," are asserting their influence over corporate activities in their territories, demanding a more inclusive and collaborative approach from MNEs.

This shift in power dynamics highlights the need for MNEs to prioritize social and cultural embeddedness at the micro-level. To succeed in emerging markets, companies must adapt their strategies to align themselves with the unique sociocultural contexts of the communities in which they operate. This requires a deep understanding of local customs, values, and expectations as well as the willingness to engage in meaningful dialogue and collaboration with local stakeholders.

The implications of this new reality extend far beyond the mining industry and Peru's specific context. As MNEs across sectors seek to expand their operations in emerging markets, they must recognize that their success hinges on their ability to build strong, sustainable relationships with local communities.

This necessitates a paradigm shift in corporate strategy that prioritizes stakeholder engagement and shared-value creation. MNEs must move beyond a narrow focus on financial metrics and embrace a holistic approach that considers the social, cultural, and environmental impacts of their operations. This broader perspective is not only crucial for sustainable growth but also for building trust and long-term relationships with local communities.

The lessons learned from the experience of Chinese mining companies in Peru serve as a valuable guide for MNEs seeking to navigate the complex landscape of emerging markets. By embracing a more inclusive and collaborative approach to stakeholder management, companies can not only mitigate risks, but also unlock new opportunities for growth and innovation.

In the future, MNEs' success will depend on their ability to adapt to the changing expectations of local communities and stakeholders. By prioritizing social and cultural embeddedness, companies can build the trust and social capital necessary to achieve long-term success in emerging markets.

The path forward for MNEs lies in recognizing that their success is inextricably linked to the well-being of the communities they serve. By embracing a more sustainable and inclusive approach to business, companies can not only secure their own future but also contribute to the development and prosperity of emerging markets worldwide.

The author is a research professor of Strategy and International Management at EGADE Business School, Tecnológico de Monterrey.