Rough diamonds in emerging markets: legacy, competitiveness, and sustained high performance

Purpose The purpose of this paper is to uncover the underlying drivers of sustained high performing companies based on a field study of 127 companies in Brazilian, Russian, Indian and Chinese (BRIC) and Association of Southeast Asian Nations (ASEAN) emerging markets. Understanding these companies provides a complementary way of appraising the growth, development and transformation of emerging markets. The authors synthesize the findings in an overarching framework that covers six strategies for building and sustaining legacy that leads to the succession of intergenerational wealth over time: overcoming institutional voids, inclusive markets, deepening localization, nurturing government support, building core competencies and harnessing human capital. The authors relate these strategies to different levels of development using Prahalad and Hart’s BOP framework. Design/methodology/approach This study examines the underlying drivers of sustained high-performance companies based on field studies from an initial set of 105,260 BRIC companies and close to 500 companies in ASEAN. The methods employed four screening tests to arrive at a selection of the highest-performing firms: 70 firms in the BRIC nations and 58 firms from ASEAN. Following the selection, the authors constructed cases using primary interviews and secondary data, with the assistance of Ernst & Young and with academic colleagues in Manila. These studies were originally conducted in two separate time periods and reported accordingly. This paper synthesizes the findings of these two studies to arrive at an extended integrative framework. Findings From the cases, the authors examine six strategies for building and sustaining legacy that lead to high performance over time: overcoming institutional voids, creating inclusive markets, deepening localization, nurturing government support, building core competencies and harnessing human capital. To address the evolving state of institutional voids in these countries, the authors employ similar methods to hypothesize the placement of these strategies in the context of the world economic pyramid, initially formulated as the “bottom of the pyramid” framework. Originality/value This paper synthesizes and extends the authors’ previous works by proposing the concept of legacy to describe the emergence and succession of local exemplary firms in emerging markets. This study aims to complement extant measures of nation-growth based primarily on GDP. The paper also extends the literature on institutional voids in shifting the focus from the mix of voids to their evolving state. Altogether, the paper provides a complementary narrative on assessing the market potential of emerging markets by adopting several categories of performance.