institutional environment in a market directly affects the firm’s incentives and ability to reconfigure its resources and activities (Cuervo-Cazurra and Genc, 2008) by challenging the external fit between the business model and the external environment (Nelson, 1995) that in turn facilitates, or challenges, transactions (North, 1990). Thus, the market development as the degree to which capital and labor markets, legal systems, and commercial value chains are established and developed in support of business activities (Chakrabarti, Vidal, and Mitchell, 2011; Cuervo-Cazurra and Dau, 2009) impacts the design and management of EMNEs’ business models. Differences in institutional environments across countries lead to different strategic initiatives (Chakrabarti et al., 2011). Since business models are the reflections of realized strategies (Casadesus-Masanell and Ricart, 2010) the different internationalization strategies pursued by EMNEs lead to different reconfigurations of the business model’s activity system and to different business model management strategies. External reconfiguration of resources through acquisition of businesses allows firms to gain access to strategic resources and develop new capabilities while preventing organizational inertia (Rosenkopf and Nerkar, 2001; Vermeulen and Barkema, 2001). Creation of new advantages through external reconfiguration allows EMNEs to redeploy newly obtained managerial and financial resources (Capron et al., 1998), create new process for future growth (Capron and Mitchell, 2009), and enable EMNEs to change faster and at a broader scope as opposed to internal development of activities, resources and capabilities (Karim and Mitchell, 2000). Internal reconfiguration of the activity systems allows EMNEs to expand through the exploitation of their firm-specific advantages, competencies and knowledge (Caves, 1974; Helfat, 1994) by leveraging their own traditional business models to other markets. EMNEs are able to capture large portions of their value creation by reconfiguring resources and activities in their business model in ways that suit the specific institutional and
institutional environment in a market directly affects the firm’s incentives and ability to reconfigure its resources and activities (Cuervo-Cazurra and Genc, 2008) by challenging the external fit between the business model and the external environment (Nelson, 1995) that in turn facilitates, or challenges, transactions (North, 1990). Thus, the market development as the degree to which capital and labor markets, legal systems, and commercial value chains are established and developed in support of business activities (Chakrabarti, Vidal, and Mitchell, 2011; Cuervo-Cazurra and Dau, 2009) impacts the design and management of EMNEs’ business models. Differences in institutional environments across countries lead to different strategic initiatives (Chakrabarti et al., 2011). Since business models are the reflections of realized strategies (Casadesus-Masanell and Ricart, 2010) the different internationalization strategies pursued by EMNEs lead to different reconfigurations of the business model’s activity system and to different business model management strategies. External reconfiguration of resources through acquisition of businesses allows firms to gain access to strategic resources and develop new capabilities while preventing organizational inertia (Rosenkopf and Nerkar, 2001; Vermeulen and Barkema, 2001). Creation of new advantages through external reconfiguration allows EMNEs to redeploy newly obtained managerial and financial resources (Capron et al., 1998), create new process for future growth (Capron and Mitchell, 2009), and enable EMNEs to change faster and at a broader scope as opposed to internal development of activities, resources and capabilities (Karim and Mitchell, 2000). Internal reconfiguration of the activity systems allows EMNEs to expand through the exploitation of their firm-specific advantages, competencies and knowledge (Caves, 1974; Helfat, 1994) by leveraging their own traditional business models to other markets. EMNEs are able to capture large portions of their value creation by reconfiguring resources and activities in their business model in ways that suit the specific institutional and