The Political Driver of Emerging Multinationals: Evidence from Brazil

Informações

Código: ESO2852
Divisão: ESO - Estratégia em Organizações
Tema de Interesse: Tema 11 - Estratégia, Governo e Desenvolvimento

Autores

Rodrigo Bandeira-de-Mello, Maria Fernanda Arreola Croda, Rosilene Marcon

Resumo

Much of the literature on internationalization does not take into account the role of the homecountry and the exchange of firms with politicians. Different from the host countryperspective, the home country viewpoint attempts to comprehend the relevance of politics inthe environment where the firm is originally located. Baysinger (1984) argues that theconcern of firms for controlling their political environment mainly relates to their interest indefending their private interests, maintaining an established position or administering thepublic decisions that could impact the firm. In the home country perspective, research hasfound both, positive and negative reasons, for companies engaging into internationalization,that derive from the influence of politics. On the negative side, Caves points that items suchas high taxes, could influence international investment (Caves, 1996), companies may alsoengage in business abroad to scape specific local policies (Dunning 1996) or they could beescaping a high level of corruption. On the other end companies may expand because of anexisting alignment between a foreign entity and the company’s strategy or due to a favorablerelationship between home country and host country (Blumepritt, 2003; Johanson, 1977). Weargue in this paper that nurturing political connections with the home country government isan important driver of internationalization. We use a sample of Brazilian firms to test ourpropositions. Brazil is a major player in today’s global economy. According to AmericaEconomia, four Brazilian firms are among the top 10 Multilatinas. More important, thecontext of Brazil provides a natural laboratory to isolate the effect of political connections.We measured whether connected firms to an election were more likely to show greater levelsof internationalization after the election. We fitted two models to take into account theinternationalization decision and the internationalization levels. We also used a series ofcontrol variables and robustness checks to account for possible confounding effects. We findstrong indications for our propositions that political connection is highly associated to bothwhether a firm decide to go international and the speed at which this internationalizationoccurs. Our results shed some light into the extent to which existing theoriesinternationalization explains the phenomenon of emerging multinationals. Market-basedtheories consider the role of the home country as merely a regulator or a corrupt force thatpushes domestic firms abroad. We show that firms act as a political actor to seek homecountry institutional support to reinforce their international position.

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