Multilatinas: Strategies for internationalization

Multilatinas: Strategies for internationalization

by Veneta Andonova and Mauricio Losada-Otálora

The challenges faced by Latin American multinational companies, or multilatinas, often require unique strategies tailored to a demanding global environment. The book Multilatinas studies the strategies of internationalisation exercised by large multilatinas, offering the first systematic, quantitative effort to examine the pattern of their international investments within the context of their competitive position in the domestic market. Multilatinas uncovers common strategies among sixty-two multilatinas from six countries, and emphasizes the unique challenges they face, as well as the diversity of their organizational resources. The book also brings the macro and institutional environment of Latin American countries to the fore, assessing its role as an essential component in understanding internationalization decisions, studying the role of non-market organizational resources such as bribes, negotiations and favours in business strategies.

The central theme of the book is the strategic behaviour of Latin American multinationals from six countries: Argentina, Brazil, Chile, Colombia, Mexico and Peru. This behaviour emerges as a consequence of specific and systematic choices made about the place, timing and entry mode of internationalisation, triggered by the degree of institutional uncertainty in the environment and the unique organisational resources and competences of the businesses, including available non-market resources.

The research approach is to combine the resource-based view of the firm with the institutional perspective, following a growing trend in studies of emerging multinationals. While the resource-based view allows to identify the key characteristics of resources, institutional theory provides a framework for explaining what, why and when market and non-market resources are involved in the internationalisation of multilatinas.

A departure point is that the relationship between the institutional environment of emerging countries and multilatinas’ internationalisation depends on the characteristics of the resources on which multilatinas base their advantages at home. The existing evidence suggests that emerging multinationals have developed a wide range of resources, which they use to create advantages at home and to expand their operations abroad. Some of these resources are highly redeployable and fungible, that is, they are usable across a variety of markets (countries) without the need for major modifications and adaptations. For example, some emerging multinationals exploit their technological resources across various markets because the value of the technology is not eroded when used in a different context from the one where it was created. In other cases emerging multinationals have created market advantages at home based on context-specific resources, such as strong brands, distribution networks or deep managerial knowledge of the market. Unlike technological resources, these kinds of resources are not fungible or transferable across markets and the possibilities of creating value abroad by exploiting them are limited.

These differences expose resources to a different set of challenges in the context of institutional uncertainty and determine the internationalisation strategy of companies whose competitive advantage is built predominantly on one or other type of resource. For example, if managers perceive that their company could lose its technological advantages due to an infringement of property rights they are under strong pressure to defend their technological resources. Holding resources that are vulnerable to the loss of their value when exposed to institutional uncertainty might influence the internationalisation decisions of emerging multinationals.

A complementary element of the link between institutional context and internationalisation strategies is captured by the relationship between the institutional environment and the use of non-market resources. Anecdotal evidence suggests that doing business in contexts with weak institutions is positively correlated to the use of non-market resources, especially favours, bargaining skills and bribes. In institutional environments with high uncertainty, non-market resources are expected (and found) to be a valuable source of international advantage because they provide an immediate fit with the context. By questioning managers about their perceptions of the role of non-market resources in the markets on which they compete we can assess directly the importance of these resources for multilatinas in different Latin American countries.

This argument presents an integrative and comprehensive approach to explain the internationalisation process of global players that manoeuvred relatively successfully through the most recent global economic crisis. More specifically, it contains exhaustive evidence that informs a discussion about how the combination of available firm resources and contextual realities drives the distinctive strategies adopted by Latin American multinationals. While the book focuses on Latin American multinationals, it makes a legitimate contribution to the broader literature on emerging market multinationals. The questions answered in this book, and the new questions it raises, are relevant to the international business and strategic management fields in the region and beyond, as they relate to two central theories in this field, the resource-based view and institutional theory.

This book is also the first book by the Emerging Multinationals Research Network (EMNRN), a collaboration project between the Samuel Curtis Johnson Graduate School of Management at Cornell, Universidad de los Andes School of Management, Universidad de Sao Paulo Business School (FEAUSP) and EGADE Business School in Monterrey, Mexico. The aim of the EMNRN’s members is to produce and accumulate knowledge to support the internationalisation of multinationals from emerging countries to facilitate their integration in the regional and global economy. Both individually and as a group of researchers the group of scholars that contributed to this book aspire to take advantage of the academic excellence in the educational institutions in emerging markets and create actionable knowledge for emerging multinationals, the public sector and local and global communities for the continuous advancement of the region.

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