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INTRODUCTION
Sarik Tara, chairman of Enka Holding, Turkey's biggest construction company, has learnt to search for contracts in difficult places. "I am stamped 'Made in Turkey', not 'Made in Germany'," says Mr. Tara. "I have to try harder. No one is going to ask me to build anything in the Champs Elysees. I have to go to difficult countries where it is easier for me to win contracts."
The collapse of communism opened a new chapter for Enka. Its first job was the restoration of the Petrovsky Passage, a shopping arcade in Moscow, in 1988. Through Mosenka, the company's Russian arm, Enka has become the biggest private real-estate owner in Moscow, and one of the city's leading developers. It has also completed more than 60 projects within the Russian Federation. (Munir, 2002: 2)
The story of Enka illustrates the disadvantages and advantages of developing-country multinational enterprises (MNEs) in comparison with developed-country MNEs. Compared with developed-country MNEs, developing-country MNEs tend to be of smaller size (Wells, 1983), and to possess technology that is less cutting-edge (Lall, 1983; Wells, 1983) and resources that are less sophisticated (Bartlett & Ghoshal, 2000; Dawar & Frost, 1999). Additionally, country-of-origin effects may create a disadvantageous image among potential clients (Bilkey & Nes, 1982). These factors compound the difficulties these companies suffer as a result of operating in a home country characterized by a difficult institutional environment and inefficient or missing market mechanisms (Ghemawat & Khanna, 1998; Khanna & Palepu, 1997, 2000).
Nevertheless, developing-country MNEs can be successful abroad, despite these disadvantages. Their ability to manage in difficult institutional conditions, a capability they were required to foster in their home countries to survive and be successful there, may be useful in other developing countries that also have difficult conditions and therefore present similar problems. They would be at less of a disadvantage, and in some cases may even have an edge over their developed-country counterparts. This is the central argument of our paper. In other words, although both sets of foreign firms will face difficulties in their internationalization (Cuervo-Cazurra, Maloney, & Manrakhan, 2007) that put them at a disadvantage in relationship to local competitors (Zaheer, 1995), when developing-country MNEs are operating in third countries with difficult institutional conditions, they may face fewer...