Introduction
Emerging market multinationals (EMNCs) are increasingly confronted with a range of challenges and uncertainties in their home-country environments (Song, Newburry, & Park, 2020). Preceding literature points to several recurring challenges confronting Chinese multinational firms, including tensions between regulatory policies and market realities (Peng & Luo, 2000), disorderly market competition resulting in industry-wide overcapacity and price wars (Côté & Hu, 2025), inability to compete on the level of international standards (Cuervo-Cazurra & Genc, 2008; Luo & Tung, 2007), and simultaneous confrontation with geopolitical and institutional risks (Luo & Tung, 2007). The accumulation of these long-term challenges and uncertainties may heighten firms’ exposure to external shocks, underscoring the importance of resilience in their internationalization process. Sheffi and Rice (2005) argued that firms’ vulnerability can be reduced by enhancing their resilience, which is key to long-term growth and survival.
Consistent with prior research, firm resilience refers to their capability to anticipate, avoid, and adjust to shocks when facing stress, change, and uncertainty (Ortiz-de-Mandojana & Bansal, 2016; van der Vegt, Essens, Wahlström, & George, 2015). Within the broader umbrella of firm resilience, Conz and Magnani (2020) stated that resilience is a dynamic attribute that includes three phases: the proactive phase, the absorptive/adaptive phase, and the reactive phase. Duchek (2020) highlighted proactive (resilience potential) and reactive (resilience realization) capabilities. Lee et al. (2013) also noted that firms need to measure resilience to identify strengths and weaknesses and improve before a crisis occurs. Building on previous research, this study focuses particularly on the proactive phase (before an event) (Conz & Magnani, 2020). Proactive resilience emphasizes anticipation and preparation, enabling firms to foresee disruptions, organize responses, and position resources in advance. Proactive resilience is especially important for EMNCs, given their exposure to institutional volatility, geopolitical tensions, and regulatory uncertainty.
Firms have difficulty in acquiring proactive resilience because it takes time to build, which forces them to prioritize between long-term growth and short-term financial performance (Ortiz-de-Mandojana & Bansal, 2016). This challenge is particularly salient in emerging markets, where firms generally face more stringent resource constraints and greater pressure to deliver short-term performance. Using social networks is necessary to successfully navigate this resource gap in emerging markets. Social networks encompass political ties, industry, and international relationships (Peng & Luo, 2000). Firms’ social networks can enhance organizational resilience by improving access to information, knowledge, experience, and external resources (Xie, Wu, Palacios-Marqués, & Ribeiro-Navarrete, 2022). They help firms sense change proactively and adjust accordingly. When shocks or disruptions occur, these relationships facilitate firms’ recovery from adversity (Asamoah, Agyei-Owusu, & Ashun, 2020). Social networks are antecedents of resilience that can bring long-term growth. In emerging markets with weak governance, social networks confer an advantage, helping EMNCs acquire resilience capabilities (Cuervo-Cazurra & Genc, 2008). Existing research fails to illuminate how firms deploy social networks to bolster resilience. This suggests a gap in the general understanding of how to build social networks and leverage them to cultivate resilience.
This study aims to understand how social networks help emerging market firms develop proactive resilience. The focus is on organizations that must navigate regulatory uncertainty, maintain government relations, and meet the legitimacy and compliance expectations of the international market. After interviews with top managers at several Chinese multinationals, three components of social networks were identified as important contributors to proactive resilience: domestic regulatory networks, domestic industry networks, and global networks. By integrating these three network perspectives, this study explains how these different types of ties support firms’ proactive resilience. From this, three recommendations are proposed.
Empirical Setting and Methods
An exploratory multiple-case study approach (Table 1) was adopted, and in-depth interviews with managers from 23 Chinese firms between May and July 2018 were conducted. The interviews lasted an average of 90 minutes (SD = 27.09). All 23 interviews were reviewed to identify recurring patterns. Four information-rich cases were then selected for detailed coding and presentation because they contained extensive evidence concerning all three network types. In the interviews, open-ended questions were raised, including “how has your firm survived and sustained in the global market over time?” Further details on case selection and analysis are provided in the Appendix.
Findings
Interviewees shared common features about how they navigated periods of adversity. They presented different networks, including experts, customers, peers, local governments, and overseas partners. These networks were used to diversify risks, obtain information, and acquire resources and credit. The ability of firms to face policy shocks, market contraction, and international compliance pressure was enhanced. Based on the interpretation of interviews, this study asserts that domestic regulatory, domestic industry, and global networks collectively form social networks contributing to resilience.
Domestic Regulatory Networks: Firms’ Relationship with Government Officials and Regulators
Institutional rules are the market “rules of the game” in emerging markets. EMNCs must effectively navigate a rapidly changing regulatory environment (Wang, Liu, Pan, & Li, 2025). Firms must anticipate information and policy changes, align capabilities and resources, and manage risks. Interviewees found it important to quickly interpret and promptly respond to new policies. Firms leveraged domestic regulatory networks (e.g., government officials) and actively engaged them.
We receive first-hand information on new regulations and policies by attending the city’s monthly board of directors meeting. [CEO, Company A]
Government officials are better at understanding and interpreting policies. Through officials’ interpretations, firms can better anticipate future regulations, proactively deploy and allocate resources, and gain a first-mover advantage.
We view each new regulation as a signal of future policy direction. Our CEO consults government officials to better understand the new regulation and its implications. [Co-founder, Company B]
When a new policy comes out, it is vital to let government officials explain what the policy really means so that we can prepare ahead of competitors, as sometimes they don’t know the policy change or the availability of certain subsidies and resources. [CEO, Company D]
By leveraging its domestic regulatory network, Company C could anticipate changes and prepare two years ahead of its competitors.
…in a meeting, government officials informed us that the industry would be regulated through Good Manufacturing Practice (GMP) certification. After consulting with relevant officials, we spent two years upgrading our equipment to meet GMP standards. When the requirement was later announced, many competitors struggled with costly changes and cash flow pressures while we were already prepared. [CEO, Company C]
Proactive preparation allows firms to anticipate uncertainty and mitigate potential disruptions when shocks occur. Domestic regulatory networks guide firms in anticipating and adapting to change and uncertainty, which enhances resilience (Li, Li, Yang, & Tian, 2025). While domestic regulatory networks can strengthen anticipation and readiness for compliance, they also carry risks. For example, a strong network can cause firms to become overdependent on a particular regulatory network, thereby reducing strategic flexibility (Sun, Mellahi, & Thun, 2010). Similarly, selective access to policy information can create legitimacy concerns. The resilience value of domestic regulatory networks depends on how firms use them. They are most useful when they support broader policy understanding and compliance preparation, rather than narrow dependence on privileged institutional ties.
Domestic Industry Networks: Firm’s Relationship with Domestic Stakeholders
Domestic industry networks connect institutions and the market. EMNCs convert these connections into operational certainty by effectively embedding themselves in industry networks (e.g., industry associations, suppliers, and distributor channels). This provides a foundation for domestic firms to link to needed resources, including where to find them and how to use them (Mudambi, Mudambi, Mukherjee, & Scalera, 2017). Companies B and D mentioned that it is critical to connect with the right and well-resourced people. Behind those people are capital, supply chains, information, and the important forces that help anticipate industry development trends and adapt to technological changes.
Employee turnover is high in our industry. Where you come from matters less than who you know. [CEO, Company D]
Our CEO is well known in the industry and maintains close relationships with the boards of major industry associations. [Co-founder, Company B]
Maintaining industry networks requires firms to actively participate in industry-related associations. Through frequent communication within and across industries, firms can identify industry trends, understand competitors, access supplier networks, and even use cross-industry advanced technologies and ideas.
We actively participate in external associations and conferences to learn from other sectors, adopt new technologies, and connect with a sharing-economy company that later became our customer. [CEO, Company A]
By leveraging and developing industry networks, Company A could build resilience and adapt to the shock of changing market demand.
Global Networks: Firm’s Relationship with Foreign Stakeholders
EMNCs find themselves chasing international standards, which are normally a significant departure from their domestic standards. Global networks bridge international standards to diverse demands amid coexisting international technical standards and geopolitical uncertainty (Mudambi et al., 2017). Firms highlight that it is essential to establish their own global networks as early as possible. Global networks of EMNCs navigate their internationalization by complying with the regulations and policies of target markets and connecting with local resources and collaborators.
We initially struggled to expand abroad, but conditions improved after we built relationships with local suppliers. They introduced us to clients and helped us communicate with local governments. [CEO, Company A]
Since expanding abroad, we have built relationships with multinationals in developed markets. Through frequent communication, we learn from their more advanced regulations, practices, and technologies. [CFO, Company C]
Our co-founder’s overseas work experience helped us build connections with international companies. [CEO, Company D]
Company B communicated more effectively with clients through the Building Information Modeling (BIM) three-dimensional (3D) system, which thereby improved client retention. This proactive alignment with international standards helped avoid shocks from industry changes. Through their global networks, firms become first movers and industry standard-setters within their own domestic networks. Global networks help firms build their resilience by planning for potential disruptions and preparing to adopt new technology.
Through our communication with the US market, we decided to adopt BIM 3D technology and became the first company to introduce it in China. Unlike 2D drawings, BIM allows non-specialist clients to understand complex designs more easily. Although our designers initially resisted the change, they adopted it after seeing that it greatly improved communication with clients. [Co-founder, Company B]
Overall, the findings indicate that domestic regulatory, domestic industry, and global networks contribute to resilience through three distinct approaches under the umbrella of social networks. Domestic regulatory networks appear especially important for interpreting policy signals, anticipating regulatory changes, and strengthening compliance readiness, which is consistent with prior research on political connections in emerging markets (Peng & Luo, 2000). Domestic industry networks play a central role in coordination, local problem-solving, and access to resources within the domestic ecosystem, aligning with research on interorganizational networks (Gulati, 1999). Global networks are particularly important for cross-border learning, exposure to new technologies and managerial practices, and identification of changes in international markets, aligning with research on network-based internationalization and EMNCs’ capability upgrading (Johanson & Vahlne, 2009; Luo & Tung, 2007). The findings suggest that different networks are utilized through diverse channels and provide differing values under varying conditions. Their development strengthens intermediate capabilities like anticipation and compliance readiness, which in turn support proactive resilience. Meanwhile, being resilient through domestic regulatory networks is a double-edged sword for firms. While they may enhance firms’ capacity to anticipate regulatory change, domestic regulatory networks may also lead to overreliance on specific access channels and limit firms’ adaptability. These findings are summarized in Table 2.
Actionable Recommendations
Firms should engage regulators through transparent, lawful, and institutionally appropriate channels, such as formal consultations, regulatory briefings, industry associations, and compliance processes (e.g., GMP regulation: Company C in domestic regulatory networks). Firms should avoid dependence on privileged personal access, which may generate legitimacy concerns and reduce strategic flexibility.
Firms should learn from advanced markets, such as adopting advanced technology and embracing international standards (e.g., BIM 3D technology: Company B in global networks). Firms in emerging markets may benefit from anticipating convergence with influential international standards, particularly where access to major foreign markets depends on regulatory or technical compatibility. If aiming to align with international standards as closely as possible from the outset, firms can take the lead in reforming industry standards and reduce losses during the realignment period.
Firms should develop their own network-based support in domestic (e.g., sharing economy collaboration: Company A in domestic industry networks) and international markets (e.g., navigating internationalization: Companies A, C and D in global networks). This network-based support includes upstream and downstream (e.g., suppliers and distributors) and cross-industry firms. In network-based support, key practitioners can grant access to resources. This network-based support can be extended to host-country stakeholders when firms attempt to enter international markets. Firms should prioritize maintaining reciprocal relationships with aligned firms and individuals within their network-based support.
All recommendations should be consistently implemented during periods of stability. Benefits of resilience usually take a long time to manifest and favor a proactive rather than reactive approach. Since relationships with external stakeholders require resources and time to strengthen, firms need to recognize unexpected disruptions and establish these connections with the long view in mind.
Conclusion
This study applies and elaborates on established resilience concepts in the context of EMNCs by demonstrating how EMNCs develop proactive resilience through different networks to face institutional and geopolitical turbulence. This study is among the first to integrate domestic regulatory, domestic industry, and global networks into a unified framework for the understanding of firm resilience. This integrated view allows us to move beyond looking at social networks as a whole and instead understand which networks matter and how to enhance proactive resilience. The findings are most relevant to firms when government relationships, regulatory uncertainty, and international standards are volatile.
This study has some limitations. The sampling of firms across multiple industries in China is relatively modest considering the substantial heterogeneity of the Chinese economy. Accordingly, this study is intended to provide analytical insights and contribute to theory development rather than statistical generalization. Collected in 2018, the initial data does not fully capture the changes that occurred afterward. Future research could focus more on recent changes and a larger sample size.
About the Author
Mohan Song is an Assistant Professor in the Department of Management at Central Michigan University. She earned her PhD in Business Administration from Florida International University. Her research focuses on global strategy, particularly organizational capabilities in emerging markets. Her work has appeared in journals across international business, global strategy, and hospitality management, including Organizational Research Methods and the Journal of Business Research.