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Abstract
Real estate development in emerging markets lacks transparency and is rather a 'black box' to foreign direct investors. We apply an empirical method to compare the real estate development process in an emerging market with a U.S. benchmark model. In particular, through a detailed survey of real estate development managers in India, we find evidence that firms that are larger, older, operate in smaller cities or are not seeking foreign investment significantly differ in the development process from the benchmark model. Based on the responses, we apply the method to propose a five stage real estate development process model for India. We offer a simple method to quantify the cross-national differences and scientifically generalize the processes in the opaque emerging markets.
Cross-national comparison of entrepreneurial processes so as to analyze how and why they differ is critical to multinational entrepreneurs and direct investors. According to the Comparative Discovery, Evaluation, and Exploitation (CDEE) framework suggested by Baker, Gedajlovic, and Lubatkin (2005), when firms internationalize their operations, a comparative stream must examine how and why business processes differ across national contexts. Lack of this knowledge is an obstacle to decision making related to the development of international operations (Johanson and Vahlne, 1977). Further, a lack of alignment between the strategic 'what to do' and the operational 'how to do it' is often a severe obstacle undermining business model viability and feasibility (Solaimani and Bouwman, 2012). However, pre-requisite to answering the why's and how's of the differences is identifying the differences.
Slowing economic activity in the developed markets has created substantial investment interest in emerging economies, particularly in real estate markets.1 Despite this surge in interest, direct investors from developed countries, who are driven by the need to improve organizational efficiency (Naidu, Reed, and Heywood, 2005) are faced with the classical issue of misalignment in cross-border business processes and operations. Operations in real estate development firms vary substantially across location due to different regulatory and economic conditions. Internationally, such firms are also known for their lack of transparency (Schulte, Rottke, and Pitschke (2005). The issue of transparency is more pronounced in emerging markets. For example, according to Jones Lang LaSalle's Global Transparency Index, Indian cities are ranked 50 (among 100), while the highest ranks tend to...