Competing in (and out of) transition economies Canan C. Mutlu 1 & Wu Zhan 2 & Mike W. Peng 3 & Zhiang (John) Lin 3 Published online: 11 July 2015 # Springer Science+Business Media New York 2015 Abstract Transition economies have become a new frontier for multinational enterprises (MNEs). This has introduced a highly dynamic competitive environment for domestic firms operating with such less developed institutions, especially those facing the threat of MNEs with superior capabilities. Drawing on the awareness-motivation-capability frame- work from the competitive dynamics literature, this paper develops a three-round frame- work that explores the evolution of the dynamic capabilities of domestic and foreign firms and the related competitive dynamics between them in (and eventually out of) transition economies. While previous research tends to focus on MNEs or domestic firms within transition economies, ours is one of the first efforts that systematically model the competitive interaction between them with a longitudinal perspective. Keywords Competitive dynamics . Organizational learning . Multinational firms . Domestic firms . Transition economies Asia Pac J Manag (2015) 32:571–596 DOI 10.1007/s10490-015-9419-y We appreciate the constructive guidance from Editor-in-Chief Michael Carney and helpful comments from Greg Dess, Seung-Hyun Lee, Steve Sauerwald, Marc Van Essen, and Jun Xia, as well as conference audiences at the 2012 Academy of Management Conference in Boston and the 2013 Academy of International Business Conference in Istanbul. This research was supported in part by the Jindal Chair at UT Dallas. * Canan C. Mutlu cmutlu@kennesaw.edu Wu Zhan wu.zhan@sydney.edu.au Mike W. Peng apjmpeng@gmail.com Zhiang (John) Lin zlin@utdallas.edu 1 Coles College of Business, Kennesaw State University, 560 Parliament Garden Way, BB 255, Kennesaw, GA 30144, USA 2 The University of Sydney Business School, Rm 433, H10 Storie Dixson Wing, Sydney, NSW 2006, Australia 3 Jindal School of Management, University of Texas at Dallas, 800 West Campbell, SM 43, Richardson, TX 75080, USA