EXTENDING THEORY BY ANALYZING DEVELOPING COUNTRY MULTINATIONAL COMPANIES: SOLVING THE GOLDILOCKS DEBATE ALVARO CUERVO-CAZURRA* College of Business Administration, Northeastern University, Boston, Massachusetts, U.S.A. I analyze how the study of developing country multinational companies (DMNCs) can help extend theory. The renewed interest in DMNCs has generated a ‘Goldilocks’debate, with one camp arguing that the analysis of DMNCs is ‘hot’ and requires new theory, another camp arguing that it is ‘cold’and no new theory is required, and a third camp arguing that it is ‘just right’and it can be used to extend theory. I follow this third camp and argue that the unique conditions of developing countries influence the internationalization of DMNCs, creating a laboratory for extending theory. I illustrate this idea by reviewing some of the key theories and models of the multinational company and explaining how they can be extended with the study of DMNCs. Copyright © 2012 Strategic Management Society. INTRODUCTION The topic of developing country 1 multinational companies (DMNCs) has reemerged with renewed impetus in recent years. Although there was a spurt of research on these firms in the 1970s and early 1980s (e.g., Ghymn, 1980; Heenan and Keegan, 1979; Kumar and McLeod, 1981; Lall, 1983; Lecraw, 1977; Vernon-Wortzel and Wortzel, 1988; Wells, 1983), less was done in the 1990s (with some exceptions like Aggarwal and Agmon, 1990; Lecraw, 1993; Young, Huang, and McDermott, 1996; for a review seeYeung, 1999). The renewed interest in the 2000s appears to coincide with the emergence of some of these companies as world leaders in their industries, such as the Brazilian airplane manufac- turer Embraer or the Chinese telecommunication equipment manufacturer Huawei, and their bold acquisitions in advanced economies, such as the pur- chase of the Dutch steel producer Corus by the Indian conglomerate Tata or the acquisition of the Keywords: developing countries; multinational companies; emerging markets; international business; theory development *Correspondence to: Alvaro Cuervo-Cazurra, College of Busi- ness Administration, Northeastern University, 313 Hayden Hall, 360 Huntington Ave., Boston, MA 02115, U.S.A. E-mail: a.cuervocazurra@neu.edu 1 There is a myriad of terms used to refer to countries that are not advanced (Third World, underdeveloped, developing, the South, the periphery, backward, emerging, etc.). In this article, I use the term developing countries to refer to countries that are not advanced economies. I follow the classification of the Inter- national Monetary Fund and consider advanced economies to be the following: Australia, Austria, Belgium, Canada, Cyprus, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hong Kong, Iceland, Ireland, Israel, Italy, Japan, Korea, Luxembourg, Malta, the Netherlands, New Zealand, Norway, Portugal, Singapore, the Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Taiwan, the United Kingdom, and the United States. Hence, I include as developing countries not only less developed or underdeveloped countries (countries with very poor populations and a narrow industrial and export bases), but also emerging economies (high-growth countries that are not advanced economies), a term some researchers prefer to use because it has a more positive connotation. In any case, I use this classification of countries into developing and advanced merely for convenience of exposition. There are large differences within each group and, in many cases, the classification is not relevant because there is no clear point of separation (see Cuervo-Cazurra and Genc, 2011, for a more detailed discussion). Global Strategy Journal Global Strat. J., 2: 153–167 (2012) Published online in Wiley Online Library (wileyonlinelibrary.com). DOI: 10.1111/j.2042-5805.2012.01039.x Copyright © 2012 Strategic Management Society