Pro-market reforms and developing country multinational corporations

Authors

  • Luis Alfonso Dau

    Corresponding author
    1. International Business and Strategy Group, Northeastern University, Boston, Massachusetts, U.S.A.
      Luis Alfonso Dau, International Business and Strategy Group, Northeastern University, 309 Hayden Hall, 360 Huntington Ave., Boston, MA 02115, U.S.A. E-mail: L.Dau@neu.edu
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Luis Alfonso Dau, International Business and Strategy Group, Northeastern University, 309 Hayden Hall, 360 Huntington Ave., Boston, MA 02115, U.S.A. E-mail: L.Dau@neu.edu

Abstract

Building on the institution-based view of strategy, I study the impact of pro-market reforms on developing country firm multinationality. I propose that reforms increase multinationality by reducing institutional imperfections and increasing domestic competition, thus inducing firms to expand internationally. However, I argue the effect is higher for private firms than state firms because the former are compelled to be more responsive to institutional changes and opportunities in order to survive. Three-level RCM Poisson analyses of a panel of the largest firms in Latin America for the period 1989 to 2009 provide robust support for the arguments.

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