For 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.
- Immaturity of the Entrepreneurial Ecosystem
- Appetite for Entrepreneurship
- Outsider Status of Western Multinationals
- 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.
Do You Find Value in This Framework?
You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:
“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”
– Bill Branson, Founder at Strategic Business Architects
“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”
– David Coloma, Consulting Area Manager at Cynertia Consulting
“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”
– Roderick Cameron, Founding Partner at SGFE Ltd
Comments