Ownership choices of emerging market micromultinationals (mMNEs) under uncertainty: A real option approach

We use a real option lens to investigate how emerging market micromultinationals (mMNEs) employ foreign operation modes to address different sources of external uncertainty. Drawing from 564 mMNEs from 22 emerging markets, we firstly examine the mMNEs’ choice between high commitment operation mode (wholly owned subsidiary) and low commitment operation mode (international joint venture) in response to both economic and political uncertainty in host countries. We further investigate three enablers of strategic flexibility (multinationality, industry type and foreign investment experience) and their moderating role in the relationship between mMNE ownership choices and external uncertainties. Our results show that emerging market mMNEs choose low commitment foreign operation modes in response to economic uncertainty rather than political uncertainty when making their operation mode choice, and both multinationality and industry type moderate the economic uncertainty-operation mode relationship. • mMNEs constitute a new breed of international SMEs using advanced modes. • Emerging market mMNEs choose joint ventures under economic uncertainty (EU). • Political uncertainty has no impact on the operation mode choice of these mMNEs. • Multinationality and industry type moderate the EU-operation mode relationship.