The purpose of this paper is to explore the location decision of multinationals across major cities in Latin America. Based on agglomeration economics and institutional theory…
Abstract
Purpose
The purpose of this paper is to explore the location decision of multinationals across major cities in Latin America. Based on agglomeration economics and institutional theory, the paper explores whether institutional quality of a city can temper the attraction of agglomeration factors.
Design/method/approach
The paper analyzes the geographic dispersion of three global fast-food franchise networks in 45 Latin American cities. The explanatory variables are horizontal aggregation of other multinationals and the institutional quality of a city. The direct and indirect impacts of horizontal agglomeration are explored through negative binomial regression with controls for city population and economic power [gross domestic product (GDP)].
Findings
The key finding is that location choice of fast-food networks is driven principally by market conditions and to a lesser extent by horizontal agglomeration. The institutional quality of a city has a positive influence on the agglomeration of fast-food networks. A city with strong institutional quality makes this relation stronger.
Research limitations
Other multinational and national fast-food franchises are not included in the paper. Future studies should include a greater number of global and local fast-food franchisers.
Practical implications
The positive reinforcements of agglomeration and strong institution are important for the investment location decision of fast-food multinationals. The institutional quality of the city should be an important consideration in the location decision as it expands regionally and within a country. Smaller cities may not offer the agglomeration advantages of the large metropolitan areas, but their good institutional quality may reduce the business costs for multinationals.
Social implications
Large cities in Latin America tend to reap the benefits of agglomeration. As a result, smaller secondary cities struggle to be relevant in generating economic activity and attracting private investments. One strategy to achieve relevance is to build strong and transparent institutions and a solid business environment.
Originality/value
The inclusion of institutional quality at the city level as moderation of the agglomeration factors influencing the location decision of a multinational is original. This paper contributes to our understanding of the importance of regional cities in attracting the investment of multinational firms.
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Alba Vargas-Saritama, Verónica Soledad Espinoza-Celi and Fernando Carrión-Robles
This study investigated how cooperative learning (CL) enhanced 21st century skills and knowledge to assure English as a Foreign Language (EFL) students’ employability.
Abstract
Purpose
This study investigated how cooperative learning (CL) enhanced 21st century skills and knowledge to assure English as a Foreign Language (EFL) students’ employability.
Design/methodology/approach
This mixed experimental study comprised a sample of 64 students enrolled in an EFL program at a private university in Ecuador. The experimental group received CL, while the control group had traditional teaching for 14 weeks.
Findings
Results showed that CL significantly improved 21st century skills, particularly problem-solving and enhanced the academic performance of English learners, which supports their employability. Participants also had a positive view of CL, noting its effectiveness in developing self-regulated learning skills such as task management, seeking help and self-assessment.
Originality/value
The originality of this study lies in its specific focus on the impact of CL on English students’ self-regulated learning and 21st social skills in the context of Ecuadorian post-Covid-19 lockdown.
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The purpose of this paper is to introduce the special issue which aims to provide a better understanding of the extent of regional polarization across different economic sectors…
Abstract
Purpose
The purpose of this paper is to introduce the special issue which aims to provide a better understanding of the extent of regional polarization across different economic sectors and its impact on the business environment and strategies of firms in Latin America.
Design/methodology/approach
This paper introduces the topic of regional polarization, summarizes the findings from the articles in this special issue, and offers directions for future research.
Findings
The macro studies showed that polarization has impacted the agricultural and sector contributions to economic growth, FDI and remittance flows to the region, and created different competitive business environments in the Brazil and Mexico-led clusters. On the other hand, these studies show uniformity in the contribution of manufacturing to growth and superior women loan repayment performance across the region. The micro level studies showed convincingly that firms have to nurture different sets of competencies in the Mexican and Brazil-led clusters. These pioneer studies show the importance of the environmental context to firm's strategy.
Research limitations/implications
The alignment between firm strategy and environment is a key factor of success. In a polarized Latin America, alignment with the changing global order is a necessary condition for success. Such an alignment requires a configuration of firm strategic resources to respond to the increasing opportunities.
Originality/value
The paper introduces the special issue which lays the foundation for further studies on how firms adapt to regional polarization.
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– The purpose of this paper is to study the effect of firm-specific capabilities on performance in regional polarization.
Abstract
Purpose
The purpose of this paper is to study the effect of firm-specific capabilities on performance in regional polarization.
Design/methodology/approach
The study develops and tests a theoretical model relating regional economic characteristics and firm-specific capabilities to performance. Based on a survey conducted by the World Bank, data on 17,196 firms in 20 Latin American countries were constructed and analysed.
Findings
The performance impacts of a firm's operations capability, technological capability and marketing capability were all found to be strengthened by operating in the Brazil-group economies – more favorable economic environments.
Research limitations/implications
The findings confirm empirically that regional polarization has an important influence on firm performance. Moreover, these findings suggest a more nuanced understanding of the effects of firm-specific capabilities on firm performance. Some types of economies foster the effects of firm-specific capabilities and offer a favorable economic and institutional environment which can greatly stimulate firms to re-configure and develop their skills and improve their global competitiveness, leading to a better firm performance.
Originality/value
As Robles has noted, “Given that polarization is a recent [development], there is [a] paucity of research on how firms cope with either expansionary or depressed domestic and global market conditions. There is little evidence of effective strategies and [their] performance implications in expansionary and contracting markets in the region.” This study addresses this important gap in the literature by demonstrating that operating in a country grouped with Brazil-type economies was positively related with firm performance.
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Syed H. Akhter and Paulo Fernando Pinto Barcellos
The economic realignment in Latin America has created two clusters, one stagnant in the north and the other growth-bound in the south. This study aims to focus on Brazil, the key…
Abstract
Purpose
The economic realignment in Latin America has created two clusters, one stagnant in the north and the other growth-bound in the south. This study aims to focus on Brazil, the key player in the growth-bound southern cluster, and address three fundamental questions: how Brazilian executives in four B2B sectors (telecommunications, business equipment, steel, and transportation) viewed the internal competitive developments, how they strategically responded to these developments, and what were the marketing and financial outcomes of these strategies.
Design/methodology/approach
Data were obtained by interviewing top decision makers such as president, chief executive officer, and director of the companies.
Findings
Findings show that the intensity of competitive pressures due to globalization varied by sector and so did strategic responses of firms. Marketing and financial performance outcomes also varied by sectors.
Originality/value
The study adds to the growing literature on competitive market developments, strategic responses and performance outcomes of firms in Brazil, an important emerging economy and the key player in the southern Latin America cluster.
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Fernando Robles and George C. Hozier
This article reviews the emerging use of foreign trade zones in the United States and presents a competitive analysis framework to segment markets, determine levels of marketing…
Abstract
This article reviews the emerging use of foreign trade zones in the United States and presents a competitive analysis framework to segment markets, determine levels of marketing effort, and develop differential marketing strategies for zone services. Using a two‐dimensional model of potential use and competitive position, the proposed framework permits foreign trade zone services and market segments to be analysed in a single model where differential marketing strategies can be readily identified. The case of a recently formed trade zone is used to illustrate the application of the proposed framework.
The study aims to explore the sectoral contributions defined as agriculture, manufacturing and services value added, capital inflows defined as workers' remittances, foreign…
Abstract
Purpose
The study aims to explore the sectoral contributions defined as agriculture, manufacturing and services value added, capital inflows defined as workers' remittances, foreign direct investment, official development assistance and domestic credit by banks as a proxy for financial deepening in Brazil-led, and Mexico-led clusters, and Latin America and the Caribbean region as a whole. The goal is to ascertain the polarization and uniformity effects of these parameters in shaping the growth and development in the midst of global financial crisis and economic challenges facing the region.
Design/methodology/approach
Using the classifications of Brazil-led cluster and Mexico-led cluster from Izquierdo and Talvi, the study is advanced using panel (pool) data estimation using the ARDL approach. The author used the augmented Solow framework to advance the study. He first established the desired cointegration vector for individual countries within the cluster, each cluster level and the region prior to pursuing the regression estimation. Both clusters were combined to represent the region. The author estimates the short-run (first-difference) and long-run effects of sectoral contributions and capital inflows in the region.
Findings
The region's capital productivity is driven by Brazil-led cluster. In phase 1 (sectoral shifts), polarization is noted in agriculture (dominated by Brazil-led cluster); and services (dominated by Mexico-led cluster). Uniformity exists in two clusters and the region with respect to manufacturing share where both clusters have almost equal (positive) dominance and hence exuding positive effects in the region. In phase 2, polarization is noted in remittances (dominated Brazil-led cluster), foreign direct investment (dominated by Mexico-led cluster) and financial development (dominated by Brazil-led cluster). Uniformity is noted in both clusters and the region from negative effects of official development assistance (ODA).
Originality/value
The study is fairly new and contemporary in its attempt to analyze the effects of sectoral shifts and capital inflows in Latin America and the Caribbean (LAC) region. Using the classification of Brazil-led cluster and Mexico-led cluster, it investigates the polarization and uniformity in the region with respect to these parameters. The study contributes to policy dialogue, and explores the emerging trends in key economic and structural factors of growth whilst highlighting some burgeoning issues shaping LAC's growth and development overall.
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Diego Antonio Bittencourt Marconatto, Luciano Barin Cruz, Renaud Legoux and Danilo Correa Dantas
The authors aim to examine how macro, meso and micro territorial boundaries influence the loan repayment performance of female clients of mega microfinance institutions (MFIs…
Abstract
Purpose
The authors aim to examine how macro, meso and micro territorial boundaries influence the loan repayment performance of female clients of mega microfinance institutions (MFIs) operating in a polarized Latin America and the Caribbean (LAC).
Design/methodology/approach
The study uses panel data (random effect analysis) comprising seven years and 407 MFIs of LAC.
Findings
The repayment performance of MFIs' female clients in LAC is meso and micro territorially bounded. It is positively influenced by the urbanization and gender inequality levels of the LAC countries, and by the number of loans per MFI loan officer.
Research limitations/implications
Data concerning the risk of the businesses women invested in, or data related to women's access to credit, were not included; high heterogeneity in large countries must be taken into account. The authors' findings expand the understanding of territorial boundary conditions concerning female clients' repayment performance and extend the prior literature on the subject.
Practical implications
The authors' findings suggest that the MFIs operating in LAC should increase their number of loan officers. The MFIs of the Mexico-led cluster may also seek a better balance between female and male clients, since hiring more loan officers may be impracticable for them.
Originality/value
The authors empirically challenge the widely accepted assumption that female clients are always the best choice for MFIs. They also unfold territorial boundaries conditioning these clients' performance.
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Carlos M. Rodriguez, Jorge A. Wise and Carlos Ruy Martinez
This study aims to examine in the context of high involvement exporting Mexican firms a model which suggests that a blend of absorptive and dynamic capabilities is necessary to…
Abstract
Purpose
This study aims to examine in the context of high involvement exporting Mexican firms a model which suggests that a blend of absorptive and dynamic capabilities is necessary to build and sustain their competitiveness in international markets.
Design/methodology/approach
Data were collected from 119 high involvement Mexican exporting firms through informants. Formative and reflective constructs were validated through MIMIC models and confirmatory factor analysis using LISREL. The theoretical model was tested using partial least squares (PLS).
Findings
Results suggest that high involvement Mexican exporting firms' capacity to adapt through product design, technology management, manufacturing processes, and cooperative relationships impacts their innovation and market expansion-adaptation capabilities. Nurturing an entrepreneurship orientation is critical to build flexibility, transfer innovation to markets, and drive export performance. Ultimately, performance is determined by the firms' ability to design and develop products through the adoption of improved technologies, a deep understanding of international demands, and an ability to refocus exporting strategies as changes in competitive contexts require.
Research limitations/implications
The design of exporting capabilities in this study only applies to high involvement exporting firms.
Practical implications
High involvement exporting firms sustain growth through the development of exploration (learning), exploitation (expansion-adaptation), and dynamic (innovation, entrepreneurship) capabilities as determinant of performance.
Originality/value
This is the first model that tests relationships among learning, manufacturing flexibility, and market expansion-adaptation and dynamic capabilities such as innovation and entrepreneurship and their impact on performance in high involvement Mexican exporting firms.