Region-Based Institutions and Internationalization Decisions: Evidence from Latin America

ABSTRACT

While the importance of country-level institutional influence is well-documented, we theorize and investigate how region-based institutions affect decisions of a segment of emerging market multinationals. Specifically, we examine the level of ownership pursued by Latin American multinationals during cross-border acquisitions. As predicted, increased levels of political democracy and capital investment prompted increased ownership pursued by Multilatinas. Increased levels of regulatory control were also found to spur increased ownership to a point, after which ownership was dissuaded (inverted U relationship). Further, Multilatinas are 3.4 times more likely to pursue full ownership within Latin America as opposed to an external region.

KEYWORDS:

• Emerging market multinationals
• internationalization
• Multilatinas
• region-based institutions
• cross-border acquisitions
• equity participation
• Latin America

Disclosure statement

No potential conflict of interest was reported by the authors.

Supplementary material

Supplemental data for this article can be accessed www.tandfonline.com/uitj.

Notes

The appendix can be found online at www.tandfonline.com/uitj.