Partnerships with Emerging Market Startups

Building profitable partnerships with prospective startups is a far more challenging undertaking for large multinational corporations than it first looks. Occasionally, multinational corporations have difficulty locating potentially advantageous startup partners.

Given the huge hierarchies of multinational corporations, it is incredibly challenging for startups to identify and engage key decision makers. These challenges are exacerbated in Emerging Markets.

Emerging Markets are characterized as rapidly developing markets that reflect traits of established markets, but have not yet met all the requirements for a developed market. Historically, Emerging Markets may have previously been established markets.

Such markets are believed to provide more profitable opportunities, but also involve a larger risk owing to a variety of other factors. Emerging Market countries are regarded to be between developing and developed.

Even for major multinational corporations, building effective relationships with new startups is a challenging undertaking. According to research on successful collaborations between multinational firms and startups in Emerging Markets, there are 4 crucial factors that determine the relationship.

1. Immaturity of the Entrepreneurial Ecosystem

2. Appetite for Entrepreneurship

3. Outsider Status of Western Multinationals

4. Access to Novel Innovations

Research on multinational corporations’ partnerships with startups in Emerging Markets was also able to identify 4 strategies, one for each major factor, to solve the partnership engagement problem.

Certain factors may be more significant than others for a particular multinational company, but all 4 have a role.

Let’s go a bit more into the methods related to each aspect.

Compensate for the immaturity of the entrepreneurial ecosystem.

Due to the immaturity of the entrepreneurial environment, a significant number of Emerging Markets are hampered by institutional limitations and gaps. Some refer to this issue as the “last mile” issue. Such conditions need the development of trustworthy partnerships to assure the fulfillment of responsibilities by each partner. The higher burden of compensating for the deficiencies of the entrepreneurial ecosystem lies on multinational enterprises attempting to join such regions.

Commit resources to tapping the entrepreneurial energy in Emerging Markets.

Despite the limitations of Emerging Regions, entrepreneurship is necessary owing to the abundance of prospects in these markets. In a few cases, flourishing growth corporations have invigorated startup ecosystems in Emerging Markets. In these Emerging Markets, global corporations may place their accelerators. This commitment might lead to a plethora of networking and collaboration activities in the Emerging Markets among all stakeholders.

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

In foreign markets, unfamiliar circumstances are a given, but in Emerging Markets, the lack of understanding on local conditions is magnified, giving global firms the status of outsiders. Such issues may be resolved by cooperating with organizations that are conversant with the local context, such as incubators that interact with local governments and businesses.

Co-innovate with startups to access novel technologies.

The lower cost structure and enormous market size of Emerging Markets are essential draws for multinational firms. Local innovation discovery may also be advantageous for international organizations. The restrictions of Emerging Markets push entrepreneurs in these markets to apply concepts that cannot be envisioned in industrialized countries. Through co-innovation initiatives in Emerging Markets, multinational firms may also exploit breakthrough technology.

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