Internationalization through sociopolitical relationships: MNEs in India

This paper discusses how foreign Multinational Enterprises (MNEs) with limited resources may build a position in a challenging and culturally different emerging market. We apply exchange theory and an interorganizational approach, and discuss how firms develop a unique set of relationships and gain the support of business, as well as political and social actors, to manage their operations in an emerging market. Based on two case studies and several in-depth interviews with managers and decision makers in Sweden and India, we demonstrate how Tetra Pak and Axis Communications, two Swedish multinationals, are able to innovate and create new values for customers and other stakeholders in the Indian market. Our emphasis on political and social actors, combined with business relationships, offers a new understanding about how MNEs may manage emerging markets. The study also shows how exchange theory can help in analyzing this internationalization process.