Regional competitive advantage based on pioneering economic reforms: the case of Chilean FDI

Abstract

Foreign affiliates of Chilean companies operating in Latin America were more profitable than similar local firms, but this difference in profitability has been decreasing over time. Two case studies of Chilean multinationals illustrate our hypothesis that one source of competitive advantage for Chilean firms was their know-how of business strategy during economic liberalization. Using empirical and theoretical considerations, we analyze whether this hypothesis is valid for other firms and industries. Journal of International Business Studies (2007) 38, 901–927. doi:10.1057/palgrave.jibs.8400299

Pro‐market reforms and developing country multinational corporations

“…Developing country firms have significantly improved their competitiveness and increased their multinationality of late (Anand et al ., 2006; Cuervo‐Cazurra, 2007, 2008; Dominguez and Brenes, 1997). As a result, they have received increased attention in the literature (Cuervo‐Cazurra and Genc, 2008; del Sol and Kogan, 2007). This article contributes to that literature by helping develop a better understanding of why developing country firms have expanded their multinational presence dramatically in the last few decades.…”

Global strategy and global business environment: the direct and indirect influences of the home country on a firm's global strategy

“…Thus, in contrast to the traditional arguments that distance has a negative impact on the firm (Johanson and Vahlne, 1977), in some dimensions the distance between home and host have a positive impact on the ability of the foreign firm to achieve an advantage over domestic companies. For example, companies that face promarket reforms in their home country generate the ability to deal with them and achieve superior profitability in other countries that experience promarket reforms later (del Sol and Kogan, 2007).…”

“…One reason is that much literature focuses on the expansion across countries and takes the country of origin as a given. This neglect of the home country is understandable, since location tends to receive limited attention in international business (Dunning, 1998), but unfortunate because studies that focus on how particular characteristics of the home country affect a firm's foreign expansion can provide valuable insights (e.g., Cuervo-Cazurra, 2006;Cuervo-Cazurra and Genc, 2008;del Sol and Kogan, 2007;Garcia-Canal and Guillen, 2008;Holburn and Zelner, 2010).…”

Institutional Leverage Capability: Creating and Using Institutional Advantages for Internationalization

“…Jacobides and Kudina (), for instance, analyze the importance of home country‐specific rules for the division of labor in an industry for firm internationalization. Scholars have also argued that firms from emerging markets exploit resources in international markets based on their unique home country institutional environments (Cuervo‐Cazurra and Genc, ; Del Sol and Kogan, ; Gaur, Kumar, and Singh, ). Institutional benefits are heterogeneously distributed across countries.…”