The obsolescing bargaining model (OBM) is the cornerstone for studying host country- MNE relations. Recent research has extended the OBM to incorporate other institutional stakeholders who participate in the multi-level, multi-party iterative political bargaining over policy issues which characterises much of the bargaining now to reflect the widespread macroeconomic changes from globalization that impinge on the model.Furthermore, the emergence of developing countries like India and China as high growthend markets has conceivably changed the nature of bargaining therein. This study adopts a triadic perspective to bargaining in EMs. The conceptualization including local MNEs addresses the lack of understanding on bargaining in EMs by suitably incorporating the institutional context which frames the triadic interplay. It focuses on the role of co-opetition by local MNEs in affecting the balance of bargaining power between host governments and foreign MNEs. Co-opetition is a strategic response by multinationals where they simultaneously compete and cooperate for mutual gains. This research enables the study to empirically challenge the assertion that the propositions of the OBM have become too dated to explain current bargaining structures.The extant literature provides the theoretical underpinnings for the development of a priori propositions which guide the empirical enquiry through a case study of the life insurance industry in India. Based on the unique insights offered through the single industry study, the analysis suggests that certain EM conditions now present the context for re- emergence of obsolescence for foreign MNEs. Furthermore, it is the evolution of the EMs' own local MNEs who are deeply embedded in the local business culture constituting their identity as strategic insiders, who shape the development of bargaining power. Local MNEs as strategic insiders affect the foreign MNEs' long term business prospects in EMs based on their co-opetition through an issue- area approach. Local MNEs' existing insidership becomes the reason for both - foreign MNEs' collaboration with them and the perpetuation of their lack of strategic insidership. It is the basis for the uneven playing field and for the deterioration in their initial bargaining power. Thus, in line with the OBM, entry bargains themselves are seen to obsolesce following the ambivalence in bargaining objectives and the sequential behaviour that both the local MNEs and the host government adopt. Co- opetition emerges as the explanatory variable while discerning the nature of emergent bargaining between governments and foreign MNEs in EMs.The application of a triadic, co-opetition perspective to bargaining is revealing andprovides original insights. An extended framework and modified propositions aredeveloped for future research. This study provides grounds for revisiting the OBM inthe context of other similar markets and for guiding future MNE strategy in EMs.
|Date of Award
|31 Dec 2014
- The University of Manchester
- Government, Multinational, Triadic, Bargaining, Co-opetition, Emerging Markets