The Internationalization of Developing Country MNEs: The Case of Multilatinas
Journal of International Management, 2008
24 Pages Posted: 6 Dec 2007
I study the multinationalization - the decision to establish foreign direct investment (FDI) - of developing country firms, in particular Latin American ones or Multilatinas. Despite a long exporting tradition, many firms in Latin American have only recently become multinational enterprises (MNEs). The analysis of case studies reveals three insights. First, Multilatinas take a long time to become MNEs, reflecting the additional challenges and need for sophisticated advantages for establishing FDI. Second, Multilatinas are induced to become MNEs by the transformation of the conditions of operation in the home country that follows the process of economic reform. These induce firms to upgrade their competitiveness. As a result, they can overcome the difficulties of establishing FDI and become MNEs. Third, Multilatinas follow four alternative strategies for selecting countries where to establish FDI first. The strategies are explained by the balancing of the ease of overcoming difficulties and the advantages derived from foreign operations.
Keywords: Multinational enterprises, Multilatinas, developing country, internationalization process, incremental internationalization, eclectic paradigm, Latin America
JEL Classification: F23
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