Capability creation and internationalization with business group embeddedness – the case of Tata Motors in passenger cars

SummaryThis paper argues for an integration of the Emerging Multinational Corporation (EMNC) with the Emerging Market Business Group (BG) literature to gain a better understanding of the capability creation and internationalization of firms from emerging markets. Both the EMNC and the BG literature have so far developed in relative isolation which is particularly surprising if we keep in mind that many well-known latecomer EMNCs are BG group affiliates. We therefore argue that understanding the capability creation and internationalization of EMNCs warrants a closer look at the role of BG embeddedness of those firms. Drawing on business group literature we argue that companies benefit in two particular ways from their business group affiliation. First, business group affiliation plays a key role in providing access to internal and external resources and capabilities in the creation of internationally exploitable assets. Second, business group affiliation plays a key role in buffering the company from the risk that are involved in creating and exploiting assets through internationalization. We illustrate our argument by drawing on the case of Tata Motors Ltd. (TML) in passenger cars which is affiliated with the Tata Business Group.