10477591866?profile=RESIZE_400xFor big multinational organizations, building fruitful collaborations with potential startups is a considerably more difficult task than it initially appears.  Global enterprises sometimes struggle to find potentially favorable startup partners.

Given the vast hierarchies of multinational firms,it is extremely difficult for startups to identify and engage the key decision makers.  These challenges are exacerbated in Emerging Markets.

Emerging Markets are defined as fast expanding markets that exhibit characteristics of developed markets, but have yet to reach the full criteria of a developed market.  In the past, Emerging Markets may have already been developed markets.

Such markets are believed to offer more profit opportunities, but also carry a greater risk due to a variety of other factors. Countries with Emerging Market category are considered to be between developing and developed.

Even for large global organizations, forming successful alliances with innovative startups is a difficult task.  According to a study on effective partnerships between multinational corporations and startups in Emerging Markets, there are 4 essential variables that influence the connection. 

  1. Immaturity of the Entrepreneurial Ecosystem 
  2. Appetite for Entrepreneurship 
  3. Outsider Status of Western Multinationals 
  4. Access to Novel Innovations 


Research on multinational firms' partnerships with startups in Emerging Markets was also able to identify 4 strategies, 1 for each key factor, to address the partnership engagement issue.

Certain criteria may be more influential than others for a specific multinational firm, but all 4 play a role.

Let's delve a little more into the strategies associated with each element. 

Compensate for the immaturity of the entrepreneurial ecosystem.

Due to the immaturity of the entrepreneurial ecosystem, a substantial number of Emerging Markets are plagued with institutional constraints and voids.  Some refer to this issue as the "last mile" issue.  To ensure the fulfilment of obligations by each partner, such circumstances necessitate the formation of trustworthy alliances.  The greater weight of compensating for the shortcomings of the entrepreneurial ecosystem falls on the shoulders of multinational firms seeking to enter such areas. 

Commit resources to tapping the entrepreneurial energy in Emerging Markets.

Despite the constraints of Emerging Markets, there is a need for entrepreneurship due to the number of opportunities in these markets.  In a few instances, thriving growth firms have energized startup ecosystems in Emerging Markets.  In these Emerging Markets, global corporations can locate their accelerators.  This dedication might develop a multitude of networking and partnership initiatives in the Emerging Markets among all parties. 

Work with local groups to overcome the limitations of outsider status.

In foreign markets, unfamiliar conditions are a given, but in Emerging Markets, the lack of information regarding local conditions is amplified, giving global corporations the status of outsiders.  Such problems can be overcome by partnering with institutions that are familiar with the local environment, such as incubators that collaborate with local governments and companies. 

Co-innovate with startups to access novel technologies.

The decreased cost base and huge market size of Emerging Markets are fundamental attractions for global corporations.  Local innovation discovery can also be an advantage for multinational corporations.  The limitations of Emerging Markets force entrepreneurs in these markets to employ concepts that cannot be conceived in developed nations.  Through co-innovation projects in Emerging Markets, global corporations can also utilize innovative technologies.

Interested in learning more about Partnerships with Emerging Market Startups?  You can download an editable PowerPoint on Partnerships with Emerging Market Startups here on the Flevy documents marketplace.

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