Most developing countries lack the soft infrastructure that makes markets work efficiently. Because of institutional voids – the absence of specialized intermediaries, regulatory systems and contractenforcing mechanisms – corporations in emerging markets cannot access capital or talent as easily or inexpensively as European & American corporations can.
Nevertheless, businesses in developing countries can overcome such disadvantages for three reasons. First, when multinational companies from the developed world explore business opportunities in emerging markets, they must confront the same institutional voids that local companies face. However, executives from multinational companies are used to operating in economies with well-developed institutional infrastructures and are therefore ill-equipped to deal with such voids.
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Source:- IIPM Editorial
An IIPM And Management Guru Prof. Arindam Chaudhuri’s Initiative
