of its startups. One multinational executive we inter-
viewed commented, “There are only two markets in
the world that have a large enough scale to warrant
building market-specific infrastructure: the U. S. and
For many global companies, it has become trendy
to include some form of startup engagement as one of
the organization’s innovation strategies. However, in
emerging markets, our research indicates that engag-
ing with startups effectively requires dedication and
effort, and should not be undertaken lightly. By
devising strategies to tackle the key factors we have
identified, multinational companies will greatly
increase their odds of creating mutual value for them-
selves and their startup partners.
Shameen Prashantham is an associate professor
of international business and strategy at China
Europe International Business School (CEIBS) in
Shanghai, China. George S. Yip is a professor of
marketing and strategy at Imperial College Business
School in London and coauthor of the book China’s
Next Strategic Advantage: From Imitation to Innovation
(MIT Press, 2016). Comment on this article at
http://sloanreview.mit.edu/58226, or contact the
authors at firstname.lastname@example.org.
The authors thank AkzoNobel, Bosch, DSM, Philips,
and Shell for sponsoring the CEIBS Centre on China
Innovation, the entity that provided financial support for
our research. We also thank the many executives and
entrepreneurs whom we interviewed or who participated in our conferences and forums. Finally, our thanks
go to Wing Wang for her diligent research assistance.
1. See, for example, S.A. Alvarez and J.B. Barney, “How
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2. Emerging markets are commonly defined as those
with significantly lower average incomes than those of
wealthy countries such as the U.S., Japan, and Germany.
The term “emerging markets” is often considered to
cover most of eastern Europe, most of Asia, most of
Latin America, and all of Africa. The four most important
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and China, or BRIC, by the investment bank Goldman
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(See B. Hounshell, “BRICs,” Foreign Policy 185 (March-
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challenging market for Western multinational companies,
and its economy shrunk in 2015. While Brazil’s environ-
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the ‘Headquarters Knows Best’ Syndrome,” MIT Sloan
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18. More information about the Microsoft Equity Equivalent Programme can be found at www.microsoft.com/
Reprint 58226. For ordering information, see page 4.
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