This article explores how Indian multinational enterprises (MNEs) successfully operate in foreign markets using non-equity modes, such as partnerships, rather than direct investments. Traditionally, it is believed that MNEs should invest in local firms to access valuable local resources and minimize transaction costs. However, the study finds that Indian MNEs often thrive without such investments, especially in emerging markets where relationship networks are crucial. This challenges the conventional asset-bundling view, which suggests that non-equity modes are inefficient for combining intangible assets. This article uses a multiple case study approach to understand how Indian MNEs manage to sustain non-equity operations. The researchers conducted 51 interviews with executives from nine Indian MNEs operating in 62 emerging markets. They focused on how these companies bundle their consultative selling skills with local partners' relationship networks. The study reveals that MNEs engage deeply with their partners, demonstrating commitment through high managerial involvement. This involvement includes co-selling, marketing, capability building, and long-term planning. MNEs also screen partners for alignment in values and dependence on the MNE for revenue, which helps build trust and sustain partnerships. The findings show that high managerial involvement helps MNEs build trust with partners, allowing them to bundle intangible assets effectively. This approach enables MNEs to maintain successful operations without equity investments, even in challenging markets. The study contributes to the literature by highlighting the importance of managerial involvement as a form of market commitment, distinct from financial investment. It suggests that MNEs can achieve sustained growth through non-equity modes by leveraging relational assets and maintaining strong partner relationships. In conclusion, the study provides a new perspective on foreign market entry strategies, emphasizing the role of managerial involvement in sustaining non-equity operations. This approach allows MNEs to navigate the complexities of emerging markets without the risks associated with direct investments. Future research could explore how these strategies apply to other contexts and industries, potentially offering a model for MNEs seeking to expand internationally with minimal investment risk. This text was initially drafted using artificial intelligence, then reviewed by the author(s) to ensure accuracy.
Kashyap et al. (Tue,) studied this question.