Sequence of Value-Added Activities in the Internationalization of Developing Country MNEs

Journal of International Management, Vol. 13, No. 3, pp. 258-277, 2007

23 Pages Posted: 9 Dec 2007

See all articles by Alvaro Cuervo-Cazurra

Alvaro Cuervo-Cazurra

Northeastern University - Department of International Business and Strategy

Abstract

This paper studies the sequence of value-added activities in the multinationalization of firms from developing countries. Analysis of twenty Latin American multinational firms, or Multilatinas, reveals three alternative sequences: start multinationalizing with marketing subsidiaries in all countries, start multinationalizing with production subsidies in all countries, or start multinationalizing with marketing subsidiaries in some countries and production subsidiaries in others. These alternative sequences are explained through the integration and extension of arguments from the incremental model of internationalization and its discussion of difficulties, and the eclectic paradigm of foreign production and its discussion of advantages. I argue that firms that benefit from a location advantage in the country of origin are more likely to start multinationalizing using marketing subsidiaries, firms that benefit from a location advantage in the host country are more likely to start multinationalizing using production subsidiaries, and firms that face difficulties in the transfer of products across countries are more likely to start multinationalizing using production subsidiaries.

Keywords: sales subsidiaries, production subsidiaries, multinationalization, foreign direct investment, developing countries, multinational enterprises

JEL Classification: F23

Suggested Citation

Cuervo-Cazurra, Alvaro, Sequence of Value-Added Activities in the Internationalization of Developing Country MNEs. Journal of International Management, Vol. 13, No. 3, pp. 258-277, 2007. Available at SSRN: https://ssrn.com/abstract=1059421

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

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