How institutional voids influence Brazilian foreign direct investment in Angola

Abstract

Double Blind Review System Scientific Editor Ilan AvrichirHow do institutional voids influence emerging market multinationals (EMNEs) foreign direct investment (FDI) in developing countries? In this article we respond to this question based on a case study approach by examining Brazilian FDI in Angola as our analytical setting. We focus on the host country's institutions and its institutional voids as essential factors that attract the FDI of EMNES to developing countries. The research indicates that Brazilian companies fill in much of these voids within the market intermediaries, often creating a point of competitive advantage, and also creating advantages in relation to FDI from other economies that invest in Angola. We complement recent research on the influence of the host country's institutions on the behavior of FDI in developing countries, explaining how some EMNEs are able to use the institutional voids of developing countries as market opportunities. Our findings provide also implications for EMNEs managers from other emerging markets by providing a better understanding of how Brazilian multinationals expand their business in less developed countries, handle institutional voids and manage relationships with local and foreign institutions in the host country.

Integration into regional or global value chains and economic upgrading prospects: an analysis of the East African Community (EAC) bloc

“…Institutional void is defined as the "absences or shortcomings of the institutions that help markets to operate effectively" [25,26]. Efficient institutions are important for facilitating market transactions [27], minimizing risks [28], enabling firms to withstand shocks in the form of political instability, violence, macro-economic volatility, and even war [28,29]. While one of the goals of the EAC bloc is to foster regional integration and trade ties between member states, one of the ways to accelerate investment growth is to address institutional voids in the region.…”