Transforming Disadvantages into Advantages: Developing-Country MNEs in the Least Developed Countries

Journal of International Business Studies, 2008

27 Pages Posted: 7 Dec 2007  

Alvaro Cuervo-Cazurra

Northeastern University - Department of International Business and Strategy

Mehmet E Genc

Ozyegin University

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Abstract

We analyze the advantages and disadvantages of developing-country multinational enterprises (MNEs) in comparison to developed-country MNEs. Developing-country MNEs tend to be less competitive than developed country counterparts, partly because they suffer the disadvantage of operating in home countries with underdeveloped institutions. We argue that this disadvantage can become an advantage when both types of MNEs operate in countries with difficult governance conditions because developing-country MNEs are used to operating in such conditions. The empirical analysis shows that although developing-country MNEs rarely appear among the largest MNEs in the world, they are more prevalent among the largest foreign firms in the least developed countries (LDCs), especially in LDCs with poorer regulatory quality and lower control of corruption.

Keywords: multinational enterprises, competitive advantage, competitive disadvantage, least developed countries, governance, institutions

JEL Classification: F23, M21

Suggested Citation

Cuervo-Cazurra, Alvaro and Genc, Mehmet E, Transforming Disadvantages into Advantages: Developing-Country MNEs in the Least Developed Countries. Journal of International Business Studies, 2008. Available at SSRN: https://ssrn.com/abstract=1058841

Alvaro Cuervo-Cazurra (Contact Author)

Northeastern University - Department of International Business and Strategy ( email )

D'Amore-McKim School of Business
313 Hayden Hall, 360 Huntington Avenue
Boston, MA 02115
United States
16173736568 (Phone)
16173738628 (Fax)

HOME PAGE: http://cuervo-cazurra.com

Mehmet E Genc

Ozyegin University ( email )

Kusbakisi Cd. No: 2
Altunizade, Uskudar
Istanbul, 34662
Turkey
+90-216-564-9389 (Phone)

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