A value creation perspective on international business in Latin America: directions for differentiation between emerging market multinationals
ISSN: 1525-383X
Article publication date: 8 June 2020
Issue publication date: 19 June 2020
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.
Keywords
Acknowledgements
The authors would like to thank the Academy of International Business’ Latin America and Caribbean chapter (AIB-LAC) for their trust and collaboration in organizing the 2018 Annual Conference in Buenos Aires. The papers presented at the conference and conversations with participants informed this article to a great extent. Special thanks to Chang Hoon Oh and Daniel Shapiro for their encouragement and support in editing this special issue, and to Bill Newburry for his generosity in creating opportunities for scholars of international business in Latin America.
This paper forms part of a special section “Value creation in Latin American business: From innovation to performance”, guest edited by Michel Hermans and Armando Borda Reyes.
Citation
Hermans, M. and Borda Reyes, A. (2020), "A value creation perspective on international business in Latin America: directions for differentiation between emerging market multinationals", Multinational Business Review, Vol. 28 No. 2, pp. 157-175. https://doi.org/10.1108/MBR-03-2020-0058
Publisher
:Emerald Publishing Limited
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