The effect of dynamic capabilities on internationalization strategies: Example of Turkish business groups

With the global world disappearing the existing borders of countries, businesses that find themselves compete with the global market cast about internationalization. Especially the internationalization processes of the developing country multinational enterprises; the motivations that affect internationalization decisions and the locations preferred because of these decisions should be revealed. The aim of the study is to investigate a leading business groups' location decisions about outward-oriented foreign direct investments in Turkey with the effect of internationalization motivations, dynamic capabilities approach and institutional factors. The scope of the study, 11 multinational holding companies with foreign direct investment exceeding US $ 100 million. In this study, a two-stage mixed method was used to reflect both qualitative and quantitative perspectives. Qualitative phase of the study consists of face-to-face meetings and documentation to do two-stage content analysis to determine the internationalization motivation of holdings and their dynamic capabilities. The quantitative phase of the study includes analyzes that measure the impact of internationalization motivations on location choice in the moderation of dynamic capabilities and institutional context. According to the qualitative stage results of the research, holdings within the scope of the research act with the motivation of market, strategic asset, resource and efficiency seeking. Formal institutions are seen effective on the internationalization of holdings and their dynamic capabilities consists of marketing, internationalization, innovation capabilities. According to the quantitative stage results, when the institutional distance is high, the moderator effect of dynamic capabilities between the resource seeking and location of emerging country choice is strengthened. When the institutional distance is high, the moderator effect of marketing capabilities between the market seeking motivation and location of emerging country choice is strengthened. When the institutional distance is low, the moderator effect of internalization capabilities between the strategic asset seeking motivation and location of developed country choice is strengthened. This study is based on the pioneering business groups in Turkey, that differs from previous studies by handling both the business group and the written management level, collecting from both main and information sources, including both qualitative and quantitative analyzes, and provides theoretical contribution by filling the gap in the literature. As a practical contribution, it offers a variety of recommendations regarding location preferences, the importance of the institutional context, and the dynamic capabilities to be possessed.