Targeting one’s own region: internationalisation trends of Colombian multinational companies

Abstract

Purpose – This paper aims to provide an examination of the ongoing internationalisation processes undertaken by 30 major multinational Colombian-owned firms. It also presents a theoretical overview and a conceptual framework for the understanding of internationalisation patterns from emerging countries’ multinational enterprises. Design/methodology/approach – This study is built based both on the results collected from comparative case studies based in the literature and empirical observations of Colombia’s patterns. This study observed the evolution in terms of commitment and investment decisions that 30 major Colombian companies have undergone specially within the past decade. Findings – Although, it was found that direct exports is the widespread entry mode of Colombian companies to foreign markets, most of the observed firms preferred the consolidation in host markets through Mergers & Acquisitions instead of using Greenfield investments or joint ventures. These observations might suggest similarities with the process of internationalisation of Asian tigers multinationals, which means that they are consolidating their internationalisation process based on their learning, linkages and leverages capabilities. Furthermore, Colombian companies are following the internationalisation pattern of other multilatinas. These companies have first explorer natural markets for them; in other words, they have first attempt to be established in markets that share psychic features, and similar institutional environments, as psychic and physical proximity reduces risk and facilitates foreseen return of investments, and therefore long-term capital accumulation. Research limitations/implications – This study has some limitations that suggest further research. First, although the observed firms share one main characteristic: being Colombian-owned multinationals, they belong to diverse fields, so this might pose difficultly for the creation of a framework that explains other multinationals drivers to internationalise. A second limitation is that this analysis does not deepen into the internationalisation patterns of multilatinas from countries other than Colombia; this leaves room for further research questions that might deal with the issue of analysing advantages and disadvantages in the internationalisation process of developing country multinational corporations (DCMCs). A third limitation is that this study does not have a longitudinal approach, so this paper does not intent to provide definitive information about cause-and-effect relationship regarding the drivers for DCMCs to internationalize, instead, this study is intended to provide an analysis of the outward foreign direct investment decisions of Colombian multinational firms. Practical implications – There is limited research based on primary data on accessing the internationalisation process of Colombian multinational companies. This paper offers a research framework and results which could be replicated in other Developing Country Multinational Corporation (DCMNC), and could also be studied longitudinally. This study includes relevant information on the drivers for international expansion, market selection, perceived obstacles, entry modes and consolidation in host markets via acquisitions that could possibly support managerial decisions. Originality/value – There is limited research based on primary data on accessing the process of internationalisation of Colombian multinational companies. This paper offers research framework and results which could be replicated in other DCMNC, and also could be longitudinally studied. This study includes relevant information on the drivers for international expansion, market selection, perceived obstacles, entry modes and consolidation in host markets via acquisitions that could eventually support managerial decisions.

New Venture Creation: How Start-Ups Grow?

“…Some of these questions are: "Why do most contemporary researchers neglect meso and macro levels in their studies?". Most of the researchers mention that new venture creation is dependent on different, contextual, social, individual, and industrial factors (Gonzalez-Perez and Fernando Velez-Ocampo, 2014). If so, "what are these factors and how do they affect the process?".…”

“…This process starts with a gestation stage (Haugh, 2007;Liao and Welsch, 2008), i.e. an early stage evolution, continues with an entry (Gartner, 1985;Shaver andScott, 1991, Gonzalez-Perez andVelez-Ocampo, 2014), e.g. go to market activities (GonzalezPerez and Gutierrez-Viana, 2012), and ends with an exit strategy (Becker et al, 2015), such as merger and acquisition, IPO, etc.…”

“…Variously referred to as a journey from conception to birth (Evers, 2003), start-up (Vesper, 1990; Van de Ven and Poole, 1995;Salamzadeh, 2015a,b), preorganisation (Katz and Gartner, 1988;Hansen, 1991), organization in vitro (Hansen andWortman, 1989), pre-launch (McMullan andLong, 1990), gestation (Reynolds and Miller, 1992), entry (Lumpkin and Dess, 1996;Gonzalez-Perez and Velez-Ocampo, 2014), start-up companies are currently seen as engines of innovation in society (Brockhoff and Guan, 1996;Dushnitsky and Lenox, 2005;Khajeheian, 2014) and as a means of entering new markets (Zejan, 1990). These entities are, however, both agile and fragile (Blank, 2010;Lanciano-Morandat and Verdier, 2010).…”

International Expansion of Colombian Firms: Understanding their emergence in foreign markets

“…Low psychic, geographical and institutional distance, similar consumer purchasing power, comparable levels of economic and social development, shared colonial history and therefore significant similar cultural elements define the shared characteristics of markets, and thus facilitate regional expansion (Aguiar et al, 2009;Castro Olaya et al, 2012;Cuervo-Cazurra and Genc, 2008;Cuervo-Cazurra, 2010;Cuervo-Cazurra, 2012;Gonzalez-Perez and Velez-Ocampo, 2014;Lessard and Lucea, 2009;Ramamurti and Singh, 2009;Vargas-Hernández and Reza Noruzi, 2010). Despite the relatively rapid internationalization process of multilatinas, Cuervo-Cazura and Genc (2008) draws attention to the fact that although, Latin American companies have a long exporting tradition, they have added value to their operations abroad only very recently.…”

“…Most of the empirical studies dealing with this debate focus on EMNEs and DMNEs from a limited set of countries, especially China, India and Brazil (Ciravegna, Fitzgerald and Kundu, 2013;Fleury and Fleury, 2011;Gammeltoft et al, 2010;Matthews, 2006). Moreover, just a limited amount of studies (Bianchi, 2014;Gonzalez-Perez and Velez-Ocampo, 2014;Lopez, Kundu and Ciravegna, 2009;Losada-Otálora and Casanova, 2014) observe multinationals from Latin America (other than the Brazilian and Mexican ones) and Colombian MNEs, which boosts the relevance of this study on Colombian MNEs. Most of these authors have identified gaps in empirical evidences and existing theoretical understanding of the international expansion of firms from Latin America (multilatinas).…”