Home country (in)stability and the locational portfolio construction of emerging market multinational enterprises

Emerging markets often experience instability due to rapid changes to the institutional environment, social changes like rapid urbanization, or even unrest. We argue that emerging market multinationals (EMNEs) manage such instability by constructing and changing locational portfolios, and qualitatively analyze six cases in South Africa over a period that included the entrenchment of Apartheid, increasing resistance to it, the immediate postApartheid era, and finally the period of state capture. The four periods of (in)stability - initial tenuous stability, extreme instability, comprehensive stability, and finally growing instability - differently affected EMNEs' location choices. EMNEs went to proximate developing countries when the home country was relatively stable, but left for host countries in the developed world once the home country became unstable. Few EMNEs capitalized on their experience there once home-country stability returned, instead returning to emerging markets. These patterns are best explained by a portfolio logic that takes into account home-country environmental dynamism.