Strategic Misalignment and Capability Gaps in EMNEs: A Case Study of Firm A's Failed International Expansion

This study examines the failure of an emerging market multinational enterprise (EMNE) in the renewable energy sector using Dynamic Capability Theory. Based on 104 semi‐structured interviews with managers, policymakers, and industry experts, this study examines the cascading erosion of capabilities across sensing, seizing, and reconfiguring processes. Interview data were coded into recurring themes, and descriptive frequencies are presented to demonstrate the salience of patterns. The findings highlight three key implications. First, capability failures emerged in a cascading sequence, whereby ineffective regulatory scanning undermined localization efforts, which then constrained organizational adaptation. Second, institutional volatility in policy‐intensive sectors exacerbates these failures, ultimately undermining even initially well‐resourced strategies. Third, this case study contributes to international business research by framing EMNE failure as a theoretically significant outcome, thereby challenging the prevailing success bias in internationalization literature. The study advances Dynamic Capability Theory by framing capability erosion as a cascading process and offers managerial implications for EMNE leaders navigating volatile, policy‐driven environments.