The Hidden Cost of Rushing into Emerging Markets

"Emerging markets are increasingly important for multinational companies (MNCs), but entering these markets can be a difficult and costly experience. As interest in emerging markets grows, so too has research into their unique challenges and opportunities. A critical, yet overlooked, problem is that companies often take an overly optimistic view of how quickly success can be achieved in these complex, unfamiliar environments-a phenomenon we call the temporal optimism trap."

"As interest in emerging markets grows, so too has research into their unique challenges and opportunities. A critical, yet overlooked, problem is that companies often take an overly optimistic view of how quickly success can be achieved in these complex, unfamiliar environments-a phenomenon we call the temporal optimism trap. We explain how companies can fall into this trap and offer executives practical strategies for avoiding it."

Emerging markets are increasingly important for multinational companies and present significant growth potential. Entering these markets can be difficult and costly due to unfamiliar institutional, cultural, and competitive conditions. Increased interest has prompted more research into their unique challenges and opportunities. A critical overlooked problem is that companies often adopt overly optimistic timelines for achieving success in complex new environments, creating a temporal optimism trap. The trap causes rushed investment decisions, inadequate local adaptation, and resource waste. Companies can avoid it by setting realistic timelines, piloting initiatives, building local capabilities, and aligning incentives with long-term performance.

Read at Harvard Business Review