Internationalization and diversification strategies of companies from emerging economies: the case of fresh fruit export companies from Chile
by Luis Vinicio Losilla Solano
Date of Examination:2018-11-08
Date of issue:2018-12-03
Advisor:Prof. Dr. Ludwig Theuvsen
Referee:Prof. Dr. Alejandra Engler
Referee:Prof. Dr. Stephan von Cramon-Taubadel
Files in this item
Name:Dissertation Luis Losilla_SUB.pdf
Size:1.00Mb
Format:PDF
Description:Dissertation Luis Losilla_SUB
Abstract
English
The food and agricultural value chains have experienced constant changes throughout the last decades having important organizational and economic implications that have shaped global markets. Among these changes, a rapid globalization and the increasingly openness of international trade have pushed firms to intensify their participation in international markets as an alternative to exploit new market opportunities. These changes have exposed firms to higher levels of internationalization, forcing them to adapt and develop strategies to be able to cope with a higher complexity of modern value chains. In this regard, firms follow different internationalization strategies and paths which at the same time may affect differently firm performance depending on the diversification strategies implemented. In a similar way, the perception of the existing psychic distance between countries may influence firms’ internationalization strategies. Therefore, the analysis of these subjects has become an important research trend in the international business literature over the last decades. However, despite a great body of studies, some research gaps still remain unaddressed. First, the heterogeneity and contradictory results of empirical studies regarding the internationalization strategies and paths of firms, the effects of the diversification strategies on firm performance, and the influence of the psychic distance on firm’s market selection reveal the absence of agreement and the need for further research. Second, despite the importance of the emerging countries in the global economy, especially in the agricultural sector, most of the literature has mainly examined internationalization and diversification strategies of large multinational firms from North America, Europe or South East Asian countries. Therefore, there is a lack of scientific literature with such focus, particularly in the case of export firms in the agricultural sectors of emerging countries from Latin America. Third, there is a scarcity of longitudinal studies of the internationalization strategies and paths deeply analyzing their dynamic nature over time. Fourth, the empirical studies analyzing the geographic diversification-performance relationship have not disentangled the effects of diversification within and across geographic regions in the case of export firms. And fifth, there is a lack of studies examining the influence of the managers’ perceived psychic distance on export market selection considering a multi-dimensional approach. Therefore, this dissertation consists of three essays contributing to fill these research gaps. The first essay aims to develop and apply a conceptual framework to classify and examine the internationalization strategies and paths of firms, paying special attention to their dynamic over time. To do so, we extend the matrix of multi-nationality developed by Aggarwal et al. (2011) by incorporating a new firm category (“host regional”) and the scale and time dimensions. We employed this framework to classified 233 firms from the Chilean fresh fruit export sector over a seven-year time period (2009-2015) according to their internationalization strategies and paths. We find that most of the firms are transregionally or globally oriented, while the home regionally oriented firms show the lower frequency. Additionally, results indicate that most firms follow a linear internationalization path regarding the number of exports markets but act as born-global firms following non-linear paths regarding the psychic distance of the markets. The second essay aims to explore the effect of geographical and product diversification on firms’ export performance. To do so, we first separately examine the effect of geographic diversification within (intra) and across (inter) geographic regions on firms’ export performance. Additionally, we examine the effect of product diversification on export performance and finally we examine the role of product diversification as moderator on the geographic (intra and inter) diversification-performance relationships. The analysis is based on panel data using 279 firms over a six-year time period (2010-2015). Our results show that the relationship of both intra- and inter-geographic diversification have an inverted U-shape, where moderate levels of diversification have positive effects on export performance, but higher levels or diversification become counterproductive. Regarding product diversification, results show that it has a positive effect on export performance and a negative moderating effect on the relationship between inter-regional diversification and export performance. We found no moderating effect product diversification in the case on the intra-regional diversification-performance relationship. The third essay aims to examine the influence of the managers’ perceived psychic distance on export market selection and also to examine the strategies implemented by managers to cope with the psychic distance. To do so, we employ the cultural, administrative, geographic and economic (CAGE) distance multi-dimensional framework proposed by Ghemawat (2001) and analyze the effect of each distance dimensions individually. This qualitative research is based on 30 in-depth interviews with managers of export companies of fresh fruits in Chile. Our finding show that the perceived psychic distance has an influence on export market selection, especially the economic and administrative distance dimensions, while the cultural dimension resulted to be the less significant. We also identify the most important factors driving the influence of each of the psychic distance dimensions as well as the strategies implemented by the managers to cope with these factors. Based on the findings of the three essays, we can draw important conclusions. Internationalization strategies and paths need to be analyzed longitudinally over time to really understand the dynamics of these processes. The use of a more inclusive framework permits to capture with more precision the strategies that have been implemented by firms. We also show that diversification strategies may enhance export performance when individually implemented; however, firms need to find their optimum levels of diversification to avoid counterproductive results. Furthermore, despite the strategies implemented by firms’ managers to cope with the perceived psychic distance, our results confirm that it still influences the international market selection, and thus, affecting the way that businesses internationalize.
Keywords: Latin America; Chile; emerging economies; fruit exports; internationalization; geographic diversification; product diversification; psychic distance; market selection; CAGE