How much does country matter in emerging economies? Evidence from Latin America

DIAZ-HERMELO, F.; VASSOLO, R. S.

International Journal of Emerging Markets

Emerald

Año: 2012 vol. 7 p. 263 - 288

1746-8809

Purpose: to examine the magnitude of country, industry and firm-specific effects for firms competing in emerging economies and also explore differences between high and low performers. Design: we use ANOVA methodologies in a sample of firms competing in Latin American between 1990-2006. Findings: we found that the firm-specific effect is the most important one, and relatively equivalent in magnitude to the firm-specific effects found in developed countries. Country and industry effects are less important than the firm-specific effect. Contrary to previous studies that indicate that the country effect is relatively more important in emerging economies, we found that it is even less important than the industry effect, a result that has important implications for strategic management and international business theory. Some of the unique resources and capabilities behind the strong firm-specific effect might be resources and capabilities to manage and take advantage of the institutional and macroeconomic environment. Further analysis indicates that the firm-specific effect is relatively more important for firms showing high performance than for firms showing low performance. Limitations: findings are specific for large public corporations in Latin America. Practical implications: it allows manager to think on sources of competitive advantages in emerging economies. Originality/Value: Despite weak institutional contexts and highly volatile macroeconomic environments, managers in the region can obtain substantial differences in economic performance. Activities for such differentiation might differ from those carried out in developed countries with more emphasis in managing institutional voids and economic and political cycles but the result would be the same: successful differentiation.