The Role of Regulation in the Development and Internationalization of Social Firms

Miguel A. Montoya and Mauricio Cervantes
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Miguel A. Montoya: Instituto del Futuro de la Educación, Tecnologico de Monterrey, Monterrey 64700, Mexico
Mauricio Cervantes: Escuela de Negocios, Tecnologico de Monterrey, Monterrey 64700, Mexico

Sustainability, 2022, vol. 14, issue 12, 1-21

Abstract: We seek to understand the drivers of the internationalization of emerging-market social firms. To accomplish this, we conducted a case study analysis of the Mexican multinational Farmacias Similares. The firm created a chain of pharmacies that sold generic medicines to poor consumers and included a low-cost doctor next to the pharmacy to address the lack of widespread medical insurance. It then became a multinational by expanding in Latin America. The analysis of the case reveals three insights. First, innovations addressing development challenges can be separated into two types, social and frugal, depending on whether they solve public-good or low-income problems. Second, changes in industry regulation facilitate the development of social firms and sustainable development within the country. Third, differences in regulations across countries constrain the internationalization of social innovations more than frugal innovations of emerging-market social firms.

Keywords: sustainable development; social innovation; frugal innovation; emerging market; internationalization (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
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