A value creation perspective on international business in Latin America: directions for differentiation between emerging market multinationals

Abstract

Purpose This study aims to draw researchers’ attention to the need to differentiate within the emerging market multinational companies (EMNCs) category. This study focuses on international business in Latin America to argue that the region’s specific institutional characteristics have consequences for within-firm decision-making regarding internationalization strategies. Additionally, the study suggests that to develop a more specific understanding of international business in emerging markets, it is important to consider how decision-makers define value and how they can capture such value. Design/methodology/approach The approach used in this study draws on the bathtub analogy used in micro-foundations research in international business. It proposes a multilevel analysis in which micro-level variation in within-firm decision-making is considered, while accounting for the conditioning effects of macro-level contextual factors. Findings The study identifies characteristics of the Latin American institutional context that are relevant to international business strategies and that potentially differ from other emerging market contexts. These include the pendular shifts to and from pro-market economic reform, fragmented government intervention in business, underdeveloped capital markets, low competition among firms and polarized labor markets. The study explains how these characteristics shape the definition of value and firm strategies to capture value in international markets, and provides examples from firms in different industries. Originality/value This study applies a value creation and capture perspective to international business in Latin America, allowing for the simultaneous consideration of macrolevel institutional characteristics and microlevel variation in decision-making regarding internationalization strategies. This perspective not only helps to distinguish Latin American EMNCs from companies from other emerging market contexts, but also explains the considerable variation in the internationalization strategies of firms within the region.

The internationalisation of TechnoLatinas from a resource-based perspective

“…Therefore, at the stage of international market entry, the results suggest that social networks were more dominant than the experiential knowledge of the entrepreneurs in developing their capabilities. These findings contribute to a better understanding of how important the entrepreneurs' individual resources ( experience and networks ) are to create value for nascent firms in emerging economies and particularly in Latin America (Popli et al , 2017; Hermans and Borda Reyes, 2020).…”

“…Therefore, when entering international markets, the entrepreneurs were influenced by the experiential learning, which they had accumulated domestically and augmented by sharing experiences and knowledge with others (such as investors and new members of staff). In this sense, said external resources have upgraded the entrepreneurs' way of making decisions (and accordingly impacted also changes of their EO or CO), while determining firm-level capabilities to compete internationally (Aguinis et al , 2020; Hermans and Borda Reyes, 2020).…”

“…Even though some researchers have tackled the significance of intangible resources in driving Latin American firms' growth, such as entrepreneurial orientation (West et al, 2007) and entrepreneurs' characteristics (Capelleras and Rabetino, 2008), there is a still a lack of knowledge into how entrepreneurs' impact value creation for the nascent firms originating in these geographies (Popli et al, 2017;Hermans and Borda Reyes, 2020). This research will address this knowledge gap investigating how entrepreneurs bundle resources to build capabilities leading to value creation for new firms in Latin America.…”

An analysis of factors that influence the decision to export: perspective of Brazilian companies

“…Latin American companies in general and, in particular, Brazilian companies can take advantage of their knowledge and their exceptional ability to adapt to political instability situations to invest in developing markets (Hermans and Borda Reyes, 2020). Authors like Cuervo-Cazurra, 2016 compared to multinationals in developed economies, companies in emerging market economies have advantages when entering less-developed countries, as they have fostered capacities to manage turbulent environments.…”

Understanding resource commitment to R&D in multinational enterprises: a novel conceptual framework

“…A broad range of existing research addresses the link between resource commitment on the one hand and organizational dynamics and market conditions on the other. Factors that are shown to influence resource commitment include: entry strategy (Gollnhofer and Turkina, 2015;Vahlne, 1990, 1977;Nadkarni and Perez, 2007;Pedersen and Petersen, 1998), global value chain integration (Gupta and Govindarajan, 1986), environmental conditions (Liedong et al, 2020;Luo, 2004), firm's owner's personalized motivations (Hermans and Borda Reyes, 2020) and subsidiary initiatives (Birkinshaw and Morrison, 1995;Lee et al, 2019). However, most studies that link these factors to resource commitment limit themselves to the firm level; they thus fail to adopt the resource commitment concept, which would provide a more nuanced understanding of business functions (such as R&D).…”