The document discusses the non-market advantages of developing-country multinational companies (DMNCs) in relation to internationalization theory, highlighting the importance of non-market resources such as cultural understanding and local regulations. It presents a classification framework analyzing country environments through obligating, pressuring, and supporting dimensions, emphasizing the role of institutional factors in shaping multinational strategies. Additionally, it proposes a flexible approach to categorizing companies that move beyond the traditional DMNC vs. advanced-economy multinational companies (AMNC) dichotomy.

1. Non-Market Advantages of
Developing-Country
Multinational Companies
Luisa Agudelo Yepes, Michelle Zapata and Carolina Velez
Internationalization Theory of the Firm, 2023-2

2. THEORETICAL
BASIS
Market resources
Non-market resources
Psychic distance
DMNCs
production plants, brand names, or
product innovations
knowledge of the local language and
customs or understanding of laws and
regulations
Developing-country multinational
companies
The sum of factors preventing the flow of
information from and to the market. (language,
education, business practices, culture, and
industrial development. (Cuervo-Cazurra, & Genc,
2011)
One can classify a firm’s resources into
two types:
Clasification of multinationals:
AMNCs
Advanced-economy multinational
companies

3. Dimensions of a country’s environment -OPS
1. Obligating dimensions
Countries are not more or less developed than
others; they are merely different. (Cuervo-
Cazurra, & Genc, 2011)
2. Pressuring dimensions
Countries are more or less demanding in
pressuring the firm to continuously upgrade its
non-market resources. (Cuervo-Cazurra, & Genc,
2011)
3. Supporting dimensions
Countries are more or less developed in their
provision of external non-market resources that
support the firm’s operations. (Cuervo-Cazurra, &
Genc, 2011)

4. 1. Obligating Dimensions
Countries cannot be characterized as better or worse
than others
The bigger the difference between home and host
country, the greater the disadvantage
The direction of movement does not matter
Ex: Cultural attitudes or geography location

5. 1
2
3
1. Obligating Dimensions (Cultural attitudes)
Host Country
Host Country
Host Country

6. 2. Pressuring Dimensions of the
Environment
A company in a more demanding home country has to
continuously invest in the upgrading of its non-market
resources.
Firms from more demanding home countries have more
sophisticated non-market resources than firms from less
stringent home countries
Ex: wealthy consumers in the country who tend to be more
exacting in terms of environmental and social issues

7. 1
2
3
2. Pressuring Dimensions (Environmental compliance)
Host Country
Host Country
Host Country

8. 3. Supporting Dimensions of the
Environment
Firms benefit from being in more developed countries because
the environment provides supporting resources and the firm
does not have to invest in developing them
When the environment at home does not provide such
supporting resources, the firm either develops them itself or
learns how to operate in their absence
Ex: the firm invests in providing infrastructure to the
community in which it operates when the government does
not do so

9. 1
2
3
3. Supporting Dimensions of the Environment (infrastructure Investment by the
governments)
Host Country
Host Country
Host Country

10. Which Theory of Internationalization is developed in the study?
1. Resource-Based View
(RBV):
2. Institution-Based View
(IBV)
Role of formal and informal institutions
in shaping the internationalization
strategies and outcomes of
multinational firms.
“ Firm's unique resources and capabilities are the
primary sources of its competitive advantage
Prior experience in its home country environment
can provide it with non-market advantages or
disadvantages when operating abroad”
(Cuervo-Cazurra, & Genc, 2011)
3. Country Classification
Framework:
Classification framework based on
dimensions of the environment, such
as obligating, pressuring, and
supporting dimensions.
4. Flexible Home Country
Classification:
The study challenges the
conventional DMNC vs. AMNC
dichotomy by proposing a dimension-
specific approach to classification

11. 5.How can it contribute to
international business?
Recognition of market resources for the internationalization
process
Master the invisible barriers in the new markets
Distinguish best market opportunity
Cultural dimensions are relevant to understanding your
environment
OPS typology is flexible and can easily accommodate the
specific dimension of the environment

12. Recognition of market resources for the
internationalization process
Market
resources
Non-market
resources
“ A firm’s superior marketing resources are not likely to
translate into profits if it does not have an adequate
knowledge of the local language or customs.” (Cuervo-
Cazurra, & Genc, 2011)
Construction of headquarters
taking into account the rules and
regulations of the country.
Labor hiring taking into account
labor policies.

13. Master the invisible barriers in the new
markets
Psychic distance:
(Eriksson et al., 1997; Ghemawat, 2001)
Evans and Mavondo (2002), Evans et al. (2008), Damanpour et al. (2009), Han et al. (1998)

14. Distinguish best market opportunity
Ansoff's Matrix is a marketing planning model that helps a business determine its
product and market growth strategy.

15. Cultural dimensions are relevant to
understanding your environment
Hofstede's cultural dimensions theory. Comparison of 4 countries: US, China, Germany and Brazil in all 6 dimensions of the model.

16. OPS typology is flexible
and can easily
accommodate the
specific dimension of
the environment
obligating, supporting
pressuring

17. Bibliography
• Cuervo-Cazurra, A. and Genc, M. E. (2011), Obligating, Pressuring, and Supporting Dimensions of the Environment and the Non-Market
Advantages of Developing-Country: How contexts Matters. Multinational Companies. Journal of Management Studies, 48: 441–455.
[Accessed on August, 2018]
• Azar, G., & Drogendijk, R. (2014, September 6). Psychic distance, innovation, and firm Performance - Management International
Review. SpringerLink. https://link.springer.com/article/10.1007/s11575-014-0219-2
• Market research consulting - market opportunity studies. Company name - Geo Strategy Partners. (n.d.).
https://www.geostrategypartners.com/market-research-mos.html
• Country comparison tool. Hofstede Insights. (n.d.). https://www.hofstede-insights.com/country-comparison-tool
Thank You!!
• Ansoff, H. I. (1957). Strategies for Diversification. Harvard Business Review. (Vol. 35 Issue 5, Sep/Oct).
p113-124.https://www.casrilanka.com/casl/images/stories/2017/2017_pdfs/sab_portal/course_material/
strategies_for_diversification.pdf