The competitiveness of emerging country multinational enterprise: Does it derive from CSAs or FSAs?

Purpose: This paper aims to conduct a theoretical enquiry into the questions as to whether emerging country multinationals’ competitiveness derives from country-specific advantage (CSA) or firm-specific advantages (FSA). The case of China is also examined. Design/methodology/approach: CSAs and FSAs are examined both in theory and in the specific case of China as explicators of outward foreign direct investment from emerging countries. Findings: FSAs and CSAs are found to be imprecise explanatory mechanisms to explain the competitiveness of emerging country multinationals. The examination of imperfections in emerging markets and in global markets and the internalisation responses of firms in different contexts is found to be a superior explanation of the financial flows classified as “outward direct investment”. Originality/value: Internalisation theory requires a focus on mechanisms to convert home country attributes into competitive advantages and suggests that FSAs are context dependent, ephemeral and subject to negation by the competitive actions of rival firms.