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

Rusty V. Karst and Nolan Gaffney

The International Trade Journal, 2020, vol. 34, issue 1, 94-114

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.

Date: 2020
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DOI: 10.1080/08853908.2019.1662858

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