I am a global strategy scholar interested in understanding how context affects value creation. My expertise is concentrated in two topics: global strategic management and global sustainability governance, which I analyze using economic-based theories. Much of my research studies emerging market firms, which I use as a laboratory for extending theory, and on which I have built a deep understanding and connections. 

Global Strategic management: institutional influences on firms' value creation. On the topic of global strategic management, I explain how institutions affect firms’ capability upgrading and internationalization and, subsequently, value creation. This research stream started with my Ph.D. thesis at the Massachusetts Institute of Technology, in which I proposed that a coevolution of resources and scope in response to pro-market reforms helped firms become internationally competitive. This sparked my interest in how firms, especially emerging market ones, overcome contextual challenges and succeed.  

My contributions can be grouped into two areas: capability upgrading and internationalization. First, I explained how the institutional context of operation modifies the ways in which firms upgrade their technological capabilities. Earlier in my career, I studied research and development (R&D), proposing that the incentives to invest in R&D varied with the home country and firm conditions. Thus, I argued that regional economic integration agreements reinforced product but not factor market pressures on R&D investment ; that access to foreign technology led multinationals’ subsidiaries to reduce external but not internal R&D ; that existing knowledge resources led some firms to never invest in R&D; that R&D collaborations with universities, suppliers, customers, and competitors varied on their innovation impact, and that sources of funds altered these collaborations’ effectiveness. Building on these insights, I then studied how emerging market firms upgraded their technological capabilities despite the unsupportive home country innovation system. I proposed that such context altered innovation incentives, constrained absorptive capacity, changed learning-by-doing, and created informality costs. However, some firms built a frugality advantage and innovated to serve middle-of-the-pyramid consumers. 

Second, following a similar logic, I explain how the home country’s institutional context affects internationalization, focusing on emerging market multinationals. I started this line by clarifying the drivers of the difficulties in internationalization and explaining how emerging market firms overcame such difficulties and succeeded. These insights on emerging market multinationals improved our understanding of home country contextual effects on internationalization. I explained how the underdevelopment of the home country influenced the country,  entry mode, and non-sequential internationalization process used by emerging market multinationals. Going deeper into home-country institutions' role in internationalization, I proposed that emerging market firms built an institutional advantage at home that supported their foreign success because they learned to deal with underdeveloped institutions, pro-market reforms, and skepticism of globalization. 

Global sustainability governance: incentives for societal value creation. On the topic of global sustainable governance, I explain how incentives and norms drive firms’ value creation for society. My interest in this topic began with my doctoral studies at the University of Salamanca on how owners’ private objectives drove value creation. I have developed two research lines, one on ownership and another on misbehavior. First, I studied large owners’ effect on diversification and the worldwide diffusion of codes of good governance to modify incentives. I then focused on state-owned firms, explaining how politicians’ non-business objectives created disadvantages and advantages of stateness that shaped the state-owned firms’ foreign challenges and internationalization as they became tools of discreet power. Second, and bridging with my studies on emerging market firms, I analyzed how companies address host country corruption. I argued that corruption did not deter foreign investors from corrupt nations and that laws against bribery abroad were effective when implemented in multiple countries. I then expanded these ideas to study other types of misbehavior, and explained that firms in emerging markets undertake sustainability to overcome government failures and address unintended externalities, enabling them to benefit from such investments.


Below is a list of books, books, chapters in academic books, and teaching cases with links to the published manuscripts, grouped into the two research topics, global strategic management and global sustainability governance.  Another list of publications with their citations appears on my Google Scholar page. Pre-publication versions of the journal articles can be downloaded from my SSRN author page and the books can be purchased from my Amazon page

Journal articles on global strategic management

Cuervo-Cazurra, A., Duran, P., Arregle, J.-L., van Essen, M. 2023. Host country politics and foreign multinationals' internationalization: a meta-analytical review. Journal of Management Studies (forthcoming).

Implementing meta-analytical methods, we study how host country politics influence foreign multinational enterprises’ (MNEs) internationalization. Our meta-analysis helps clarify which ideas receive support across the empirical literature and provides additional theorization in three areas: the conceptualization of host country politics, the impact of host country politics on internationalization steps, and the moderating influence of home country conditions on the previous relation. First, regarding the concept of host country politics, we suggest differentiating host country politics between political decision-making (regulation creation) and political administration (regulation implementation) and find that not all dimensions deter foreign MNEs. Second, on the effect of host country politics on the various internationalization steps, we theorize on the dynamic management of host country politics across internationalization decisions as we find that each step is differentially affected by host country politics. Third, studying how home country conditions modify the impact of host country politics on internationalization, we theorize how MNEs build political and uncertainty management capabilities through their exposure to home country conditions, as we find a variety of home country political and nonpolitical conditions altering MNEs’ reaction to host country politics.

Cuervo-Cazurra, A., and Pananond, P. 2023. The rise of emerging market lead firms in global value chains. Journal of Business Research, 154: 113327

Extending the resource-based view that location characteristics influence firms’ resources and internationalization, we argue that the global value chains (GVCs) of lead firms from emerging and advanced economies differ in three dimensions: objectives, trajectory, and governance. First, because GVC objectives are driven to resolve home-country endowment deficiencies, we propose that emerging market lead firms use GVCs to upgrade resources while advanced economy lead firms do so to distribute activities. Second, as GVC trajectory reflects home country consumer characteristics, we argue that emerging market lead firms expand abroad to accumulate additional value-added segments of their GVCs to serve more sophisticated demands, while advanced economy lead firms disaggregate simplified segments to reduce costs. Third, since GVC governance reflects the home-country institutional quality, we propose that emerging market lead firms use more internalization, particularly acquisitions, to exert control in their GVCs, while advanced economy lead firms rely more on externalization, especially offshore outsourcing.

Cuervo-Cazurra, A., and Un. A. 2023. Beauty in the eyes of the beholders: how government- and consumer-based country-of-origin advantages and disadvantages drive host country investment dynamics. Management International Review (forthcoming).

Building on the resource-based view, we propose conceptualizing a foreign multinational’s country of origin as a resource, an asset tied semi-permanently to the firm, and analyze how this asset affects its host country investments. We argue that the country of origin provides an advantage or disadvantage in the host country depending on its positive or negative view among the host-country government and consumers. This results in four alternative configurations of host country investment dynamics based on the alignment of their views. First, when a multinational’s country of origin generates a government-based advantage and a consumer-based disadvantage, the multinational is more likely to make larger initial investments to benefit from incentives and larger subsequent localization investments to disassociate itself from the country of origin. Second, when the country of origin creates a government-based disadvantage and a consumer-based advantage, the foreign firm is more likely to make smaller initial and subsequent investments to maintain its association with the country of origin. Third, when the country of origin leads to government-based and consumer-based advantages, foreign multinationals are more likely to make a large initial investment to benefit from government incentives and smaller subsequent investments to maintain their association with the country of origin. Finally, when the country of origin leads to government-based and consumer-based disadvantages, foreign multinationals are more likely to make smaller initial investments to minimize risk and larger subsequent investments to localize.

Benito, G., Cuervo-Cazurra, A., Mudambi, R., Pedersen, T., and Tallman, S. 2022. The future of global strategy. Global Strategy Journal, 12 (3): 421-450.

Global strategy, that is, the analysis of strategy in an international context, has co-evolved with the dramatic changes in the global economy in the twenty-first century. Research advances have enabled a more sophisticated understanding of how firms develop strategies in an increasingly turbulent global environment in which societal expectations, technological advances, and political decisions are all in a state of continuous change. In this article, we reflect and provide suggestions for how the field may evolve on five key themes of global strategy: cooperation, coordination, governance, politics, and innovation. We also outline suggestions for future research on global issues that are gaining increasing centrality in business decisions: climate change, artificial intelligence, and geopolitics. 

Cuervo-Cazurra, A, Silva-Rego, B., and Figueira, A. 2022. Financial and fiscal incentives and inward foreign direct investment: When quality institutions substitute incentives. Journal of International Business Policy, 5: 417-443.

We analyze the impact of host country investment incentives on inward foreign direct investment. Building on institutional economics, we argue that financial and fiscal incentives are effective in attracting greenfield projects because they reduce the short-term establishment and long-term operational costs, respectively. We also propose that the effectiveness of the incentives varies with the institutional quality of the host country because institutional quality reduces the indirect cost of transacting in the location; thus, quality institutions have the potential to act as substitutes for incentives. The analysis of greenfield projects in 106 countries in 2010–2017 reveals that although financial and fiscal incentives have a positive impact on greenfield investments when studied separately, financial but not fiscal incentives are effective in attracting greenfield projects when analyzed together. This is a novel finding as much of the literature has concentrated on studying one type of incentive at a time. Additionally, we find that financial incentives are more effective in attracting greenfield projects in countries with high-quality institutions, while fiscal incentives are more effective in countries with low-quality institutions. Policymakers may want to concentrate on creating high-quality institutions not only because of their direct effect in attracting foreign investments, but also because they substitute for the need to provide incentives to attract foreign direct investment.

Li, D., Hitt, M.A., Batjargal, B., Ireland, R.D., Miller, T.L. and Cuervo‐Cazurra, A. 2021. Institutions and entrepreneurship in a non‐ergodic world. Global Strategy Journal, 11(4), 523-547.

This study clarifies the complex relationship between institutions (the rules and norms that govern economic transactions) and entrepreneurship. Our discussion of existing literature, special issue articles, institutions and entrepreneurship in a world of significant change, and several promising avenues for future research highlights to entrepreneurs and their stakeholders the critical role that institutions play in entrepreneurial strategies and actions in three ways. First, the types of institutions and their complexity in a location alter entrepreneurs' incentives and ability to create new ventures. Second, the continued changes in institutions - some in favor of free-market relationships and others restricting them - alter entrepreneurs' behaviors. Third, the entrepreneurial spirit and the creation of new ventures can drive the transformation of institutions that govern future market transactions.

Gammeltoft, P., & Cuervo-Cazurra, A. 2021.  Enriching internationalization process theory: insights from the study of emerging market multinationals. Journal of International Management, 100884.
We argue and explain how the study of emerging market multinational companies can help enrich our understanding of the internationalization process. Firms' internationalization process is a central and enduring theme in international business. However, most of the theoretical models are built on the analysis of advanced economy multinationals. Emerging market multinationals differ crucially in the role that the home country plays in their behavior, resulting in different patterns of internationalization. We propose that the discussion of the applicability of extant theory can be advanced by differentiating internationalization theories according to three different ontological perspectives: resource oriented, transaction oriented, and process oriented. We further suggest that the study of emerging market multinationals' internationalization processes reveals three contextual accelerators: government, catch-up, and global value chains. These accelerators help adapt internationalization process models to new contextual realities.

Bu, J., & Cuervo-Cazurra, A. 2020. Informality costs: Informal entrepreneurship and innovation in emerging economies. Strategic Entrepreneurship Journal, 14 (3): 329-368

We analyze the impact of informal entrepreneurship on innovation in emerging markets. Building on agency and imprinting theories, we introduce the concept of informality costs, that is, the higher agency costs from adverse selection and moral hazard problems caused by a firm’s informal creation. These informality costs become imprinted and affect internal agency relationships among employees and managers and external agency relationships with suppliers and distributors, constraining the firms’ incentives and ability to innovate even after formalization. As a result, informally created firms engage more in imitative and less in innovative new product development. We further propose that changes in ownership and the innovation environment alter the persistence of informality costs. Specifically, foreign firm and business group ownership reduces the persistence of informality costs and results in more innovativeness, while state ownership heightens informality costs and leads to less innovativeness. Moreover, improvements in national innovation systems decrease informality costs, strengthening the innovativeness of informally created firms.

Cuervo-Cazurra, A. Doz, Y., and Gaur, A. 2020. Skepticism on globalization and global strategy: Increasing regulations and countervailing strategies. Global Strategy Journal, 10 (1): 1-20.

We analyze how skepticism of globalization, the socially constructed vulnerability that emanates from global interdependencies, affects global strategy. We argue that inequality, identity, and influence drive skepticism and propose that the increase in rhetoric against globalization and for new regulations do not seem to result in significant reductions in cross‐border economic flows. We explain this discrepancy by proposing that multinationals' strategies counteract the impact of politicians' regulatory reactions to the skepticism of globalization. Specifically, we propose that firms increase flexibility in global value chains in response to skepticism of cross‐border trade, rework the localization of global operations to deal with skepticism of cross‐border investment, use lobbying in global finance to address skepticism of cross‐border finance, nativize the global workforce in reaction to skepticisms of cross‐border labor, and protect global knowledge to solve the skepticisms of cross‐border knowledge flows.

Cuervo-Cazurra, A., Gaur, A., Singh, D. 2019. Pro-market institutions and global strategy: The pendulum of pro-market reforms and reversalsJournal of International Business Studies, 50 (4): 598-632

We review the literature analyzing the impact of pro-market institutions on firms’ global strategy. We propose that the ideological tension between whether the government or the market should drive economic development results in a pendulum of pro-market reforms and reversals that drive changes in firm strategy and performance. Much progress has been made in the analyses of pro-market reforms and their impact on firms’ international strategies and performance. However, there is a need to further learn about four areas: (1) the concept of pro-market institutions, in particular the variety of institutional dimensions, the measures, and the influence of informal institutions on firm strategies; (2) the drivers of changes in pro-market institutions, especially firms’ influences and the co-evolution of firm strategies and institutional changes; (3) the implications of changes in pro-market reforms for the interactions among integration, diversification, and internationalization strategies, the causality chains connecting institutions and strategies, and the reconfiguration of activities globally; and (4) the non-traditional moderators that alter the impact of pro-market institutional dynamics on firms’ strategies, such as country-level political systems, industry-level competitor reactions, and individual-level managerial capabilities and perceptions.

Cuervo-Cazurra, A., Mudambi, R., & Pedersen, T. 2019. Subsidiary power: Loaned or owned. The lenses of agency theory and the resource dependence theory. Global Strategy Journal, 9 (4): 491-501.

We analyze power relationships in subsidiaries of multinational firms. We explain how despite many advances in the literature, there is still an unresolved debate between two theoretical perspectives, agency theory and resource dependence, in their resolution of the critical question of whether subsidiary power is loaned or owned. We develop an overarching framework that encompasses both agency theory and resource dependence theory as the two pillars to understand decision‐making by managers in subsidiaries. We propose that agency theory applies more when the subsidiary's decision rights are “loaned” by headquarters, while resource dependence theory applies more when the subsidiary “owns” its decision rights. We also explain how subsidiary evolution integrates the arguments of these two theories as the theories apply at different stages of evolution.

Cuervo-Cazurra, A., Mudambi, R., & Pedersen, T. 2019. Clarifying the relationships between institutions and global strategyGlobal Strategy Journal, 9 (2): 151-175. 

We review the relationships between institutions and global strategy and explain several clarifications for future research. First, studies need to clarify the standard used to assess quality in institutional dimensions they research rather than let readers assess them from the measures. Second, analyses need to specify the theoretical approach used, which may be based on the paradigm from a single discipline (economics, sociology, politics, psychology) or the integration of underlying disciplines, as often seen in management. This must form the basis of a consistent set of assumptions rather than a potpourri of arguments from incompatible logics. Third, investigations need to clarify the direction of relationship and mechanisms. On the one hand, studies on the impact of institutions on strategy should clarify the institutional influences used (adapt, appeal, avoid). On the other hand, research on the effect of strategy on institutional change should clarify the institutional strategies (inform, influence, incentivize) and institutional spillovers (compete, command, copy) by which firms change institutions.

Asakawa, K., Cuervo-Cazurra, A., & Un. A. 2019. Frugality-based advantageLong Range Planning, 52 (4): 101809. 

We analyze frugality-based advantage and explain its types and implications. Frugality-based advantage is an advantage that a firm achieves over competitors in its ability to develop and use frugal innovations, that is, innovations that overcome external resource constraints. We differentiate among three types of frugality-based advantages based on the external constraints they solve: (1) Input frugality-based advantage, which is the result of addressing restrictions in the provision of inputs needed for the production process; (2) Income frugality-based advantage, which is driven by solving limitations in the income of consumers; and (3) Infrastructure frugality-based advantage, which is the outcome of resolving constraints in the hard and soft infrastructure of the country. We explain how these three types of frugality-based advantages differ in their transferability across locations and their sustainability across time. Frugality-based advantage complements the resource-based view by explaining how the scarcity of external resources, rather than their abundance, can support the advantage of some firms.

Cuervo-Cazurra, A., Carneiro, J., Finchelstein, D., Duran, P., Gonzalez-Perez, M. A., Montoya, M. A., Borda Reyes, A., Fleury, M. T. L., Newburry, W. 2019. Uncommoditizing strategies by emerging market firms.  Multinational Business Review, 27 (2): 141-177.

This paper aims to analyze how emerging market firms upgrade their capabilities by focusing on “uncommoditizing strategies” that enable them to achieve levels of international competitiveness beyond the comparative advantages of their home countries and serve markets with premium pricing, quality, and reputation of products. The authors studied 18 Latin American companies across six countries. Latin America represents an ideal setting because many of these countries have traditionally developed using natural resource endowments, and their firms have tended to rely on these in their internationalization. To facilitate the analysis of each case and the comparisons across cases, the authors used the same analytical framework for the companies, identifying the sources of differentiation and cost efficiency strategies that enabled these firms to upgrade their capabilities and compete on the basis of premium pricing, quality, and reputation. The analysis identified a general framework that represents an abstraction of the actions taken by these companies over time. The proposed model consists of three main elements used to pursue uncommoditizing strategies: tropicalized innovation, global efficiency, and coordinated control. Recent research on emerging market firms has shown interest in how these firms upgrade their capabilities. This paper contributes to this stream of research by providing an overarching framework that not only bridged previous narrower studies but also explained how firms can develop uncommoditizing strategies to upgrade their capabilities. Further, this paper helps managers by providing a comprehensive yet succinct overview of the main strategies that they can use to help their firms to achieve international competitiveness.

Banalieva, E., Cuervo-Cazurra, A., Sarathy, R. 2018. Dynamics of Pro-Market Institutions and Firm Performance. Journal of International Business Studies, 49 (7): 858-880.

We analyze how pro-market institutions affect firm performance in emerging markets. Integrating transaction costs and signaling theory, we advance three arguments. First, we separate four dynamic components of pro-market institutions: intensifying and fading pro-market reforms and intensifying and fading pro-market reversals. Second, we propose an asymmetric dynamic view whereby not only intensifying reforms but also fading reversals improve firm performance, while not only fading reforms but also intensifying reversals reduce performance. Finally, we argue that more efficient firms perform better under each of the dynamics. We test these arguments on a sample of 1092 firms from 34 emerging markets during 1998–2011. 

Cuervo-Cazurra, A. Nieto. M. J., Rodriguez, A. 2018. The impact of R&D sources on new product development: Sources of funds and the diversity versus control of knowledge debate. Long Range Planning, 51 (5): 649-665.

We build on the knowledge-based view to study the relative impact of alternative R&D sources on innovation performance. We contrast two arguments that have created a debate in the literature: One is that diversity of knowledge is better for innovation, because the integration of a larger variety of knowledge helps create new products that can fulfill unmet customer needs; another is that control of knowledge is better, because the incentives and contextual system of the firm facilitate employees' experimentation, which supports the creation of new products. We provide one solution to this debate by arguing that the relative importance of diversity and control of knowledge on innovation depends on the sources of finance. Hence, we find that, in general, control of knowledge has a higher impact than diversity of knowledge on the sale of new products. We also find that alternative sources of finance moderate the relationships: internal funds strengthen the impact of R&D sources with more diversity of knowledge on the sale of new products, while external funds strengthen the impact of R&D sources with more control of knowledge on the sale of new products. 

Cuervo-Cazurra, A., Luo, Y., Ramamurti, R., & Ang, S. H. 2018. The impact of the home country on internationalization. Journal of World Business, 53 (5): 593-604.

We analyze how a firm’s home country influences its internationalization. We propose two complementary types of influence. First, we conceptualize a firm’s international trade as shaped by four drivers: comparative advantage, comparative disadvantage, country-of-origin advantage, and country-of-origin liability. Second, we conceptualize the firm’s foreign direct investment as shaped by four other drivers: institutional learning, competitive learning, institutional escape, and competitive escape. Taken together, these eight drivers help pull together recent theoretical advances on topics such as emerging-market multinationals, investment in tax havens, and cross-border acquisitions of firms in advanced countries. We also highlight other home-country related issues, such as strategic responses and home-host country links, in the spirit of fostering future research on home-country effects that warrant a more nuanced understanding. 

Cuervo-Cazurra, A., Mudambi, R., and Pedersen, T. 2018. The boundaries of the firm in global strategy. Global Strategy Journal, 8(2): 211-219.

We briefly review the evolution in the analysis of the boundaries of the firm in global strategy. We explain how initial studies that argued that firm boundaries were driven by the minimization of transaction costs were later complemented by analyses that proposed that firm boundaries were driven by the development and use of resources to maximize value creation and capture. Studies of global strategy combine these two approaches and introduce the influence of location—both the home and host countries—as a third influence on boundary decisions. We encourage future studies to focus more deeply on the complexity, dynamics, and mechanisms of three themes: the consideration of all boundary options, the study of the entirety of the multinational, and the simultaneous consideration analysis of the characteristics of all the locations in which the multinational is active. These suggestions help better connect the three drivers of firm boundaries: transactions, resources, and locations. 

Cuervo-Cazurra, A., Ciravegna, L., Melgarejo, M., and Lopez, L. 2018. Home country uncertainty and the internationalization-performance relationship: Building an uncertainty management capability. Journal of World Business, 53 (2): 209-221.

We analyze the impact of home country uncertainty on the internationalization-performance relationship of emerging market firms. Building on organizational learning theory and the institutional approach, we argue that internationalization has a positive impact on the performance of emerging market firms, and that this relationship is strengthened for firms based in emerging countries with higher corruption and political risk. The reason is that by being exposed to high levels of home country uncertainty in the form of political risk and corruption, firms develop an uncertainty management capability at home that helps them face the challenges of internationalization better. We also propose that this uncertainty management capability helps emerging market firms perform better outside of their home region. We test our arguments on a sample of 536 firms from Argentina, Brazil, Chile, and Peru.

Cuervo-Cazurra, A. 2018. Thanks but no thanks:  State-owned multinationals from emerging markets and host country policies. Journal of International Business Policy, 1 (3–4): 128-156.

I study the impact of the internationalization of state-owned companies from emerging markets on host-country government policy. Whereas the literature commonly recommends that host-country governments design policies to attract foreign direct investment, governments instead question or block investments by state-owned firms from emerging markets. I address this conflict between theory and practice by separating the causes of this behavior into six types depending on the characteristics of the firm (i.e., state ownership and emerging market origin) and the logic (i.e., economics, politics, and psychology). I suggest the development of ex-ante rule-based policies that provide clarity, address concerns, and support the benefits of inward investments, while limiting state capture by domestic interests. Thus, I explain how economic concerns over national security sectors and strategic technologies can be dealt with via exclusion, the political worries over opacity and weak governance can be addressed through monitoring, and the psychological anxieties of unfriendly governments and loss of relative status can be ameliorated using controls.

Cuervo-Cazurrra, A., Mudambi, R., and Pedersen, T. 2017. Globalization: Rising skepticism. Global Strategy Journal, 7(2): 155-158.

We briefly review the evolution in the analysis of the boundaries of the firm in global strategy. We explain how initial studies that argued that firm boundaries were driven by the minimization of transaction costs were later complemented by analyses that proposed that firm boundaries were driven by the development and use of resources to maximize value creation and capture. Studies of global strategy combine these two approaches and introduce the influence of location, both the home and the host countries, as a third influence on boundary decisions. We encourage future studies to focus more deeply on the complexity, dynamics, and mechanisms of three themes: the consideration of all boundary options, the consideration of all operations of the multinational, and the simultaneous consideration of the characteristics of all the locations where the multinational operates. These suggestions help better connect the three drivers of firm boundaries: transactions, resources, and locations. 

Aguilera, R., Ciravegna, L., Cuervo-Cazurra, A., Gonzalez-Perez, M. A. 2017. Multilatinas and the internationalization of Latin American firms. Journal of World Business, 52 (4): 447-460.

Latin America is an under-researched region that has the potential to yield new and important insights on the internationalization of firms from emerging markets, particularly as compared with the experience of firms from other regions. At the same time, some of the unique features of Latin America are generating new ideas that contribute to a better understanding of how the home country influences the behavior of firms in general and their foreign expansion in particular. In this article, we discuss such contributions and present some suggestions for future research. 

Barnard, H., Cuervo-Cazurra, A., and Manning, S. 2017. Africa business research as a laboratory for theory-building: Extreme conditions, new phenomena and alternative paradigms of social relationships. Management and Organization Review, 13 (3): 467-495.

Africa is an increasingly important business context, yet we still know little about it. We review the challenges and opportunities that firms in Africa face and propose that these can serve as the basis for extending current theories and models of the firm. We do so by challenging some of the implicit assumptions and stereotypes on firms in Africa and by proposing three avenues for extending theories. One is taking the extreme conditions of some Africa countries and using them as a laboratory for modifying current theories and models of the firm, as we illustrate in the case of institutional theory and the resource-based view. A second one is identifying new themes that arise from analyzing firms in Africa and their contexts of operation, and we discuss four themes: migrating multinationals and the meaning of home country, diaspora networks within and across countries, a recasting of cultural and institutional distance, and new hybrid organizational forms. A third one is developing new theories based on alternative paradigms of social relationships that have emerged in Africa that differ from those underpinning existing theories of the firm, such as kgotla and its view of community-based relationships or ubuntu and its humanizing view of relationships. 

Cuervo-Cazurra, A., and Rui, H. 2017. Barriers to absorptive capacity in emerging market firmsJournal of World Business, 52 (6): 727-742.

We identify how barriers to absorptive capacity limit success in integrating external technology by firms in emerging markets. We refine previous barriers to absorptive capacity and classify them into internal (managerial biases and weak social integration mechanisms) and external (muted activation triggers, conflicting source relationships, and feeble appropriability regimes). We also identify how particular conditions in emerging markets (higher restraints on incentives, higher information asymmetries, and weaker contract protection) heighten the barriers. Using agency theory as the theoretical base, we provide a better understanding of absorptive capacity and of the influence of the home country on capability upgrading. 

Wang, S., and Cuervo-Cazurra, A. 2017. Overcoming human capital voids in underdeveloped countries. Global Strategy Journal, 7(1): 36-57.

We analyze how firms in underdeveloped countries overcome human capital voids—a prevalence of very low levels of skills among individuals—to improve performance. Building on the knowledge‐based view, we argue that managers can strategically select organizational upgrading mechanisms to compensate for the negative effect of the human capital deficiencies of employees on firm performance improvement. We propose that external mechanisms (e.g., operating a joint venture with foreign partners) are better than internal mechanisms (e.g., internal research and development) because external mechanisms provide appropriate ready‐made knowledge for learning of low‐skilled labor, whereas internal mechanisms create additional learning inefficiencies. However, these influences change in countries with more developed human capital: external mechanisms have a lower compensating influence, whereas internal mechanisms become less inefficient. 

Cuervo-Cazurra, A., Mudambi, R., Pedersen, T., and Piscitello, L. 2017. Research methodology in global strategy research. Global Strategy Journal, 7(3): 233-240. 

We review advances in research methodology used in global strategy research and provide suggestions on how researchers can improve their analyses and arguments. Methodological advances in the extraction of information, such as computer‐aided text analysis, and in the analysis of datasets, such as differences‐in‐differences and propensity score matching, have helped deal with challenges (e.g., endogeneity and causality) that bedeviled earlier studies and resulted in conflicting findings. These methodological advances need to be considered as tools that complement theoretical arguments and well‐explained logics and mechanisms so that researchers can provide better and more relevant recommendations to managers designing the global strategies of their organizations. 

Rui, H., Cuervo-Cazurra, A. and Un. C. A. 2016. Learning-by-doing in emerging market multinationals: Integration, trial and error, repetition, and extension. Journal of World Business, 51: 686-699.

We analyze learning-by-doing and how emerging market multinationals use it to upgrade their capabilities. Building on an in-depth case study, we present two novel arguments. First, we clarify the concept of learning-by-doing by identifying four distinct processes in which learning-by-doing occurs: Integration, whereby the firm incorporates external knowledge and coordinates multiple sources of knowledge to undertake an activity; trial and error, whereby the firm attempts a new activity until it succeeds; repetition, whereby the firm improves the activity by undertaking it multiple times; and extension, whereby the firm takes on a larger and more complex activity. Second, we extend our understanding of how the country of origin influences firm behavior by explaining how particular characteristics of emerging markets (few specialized providers, relative knowledge isolation, rapid market growth, and increasing consumer sophistication) strengthen the relationships between the four learning-by-doing processes and the upgrading of capabilities to international levels. 

Cuervo-Cazurra, A. 2016. Multilatinas as a source of new theoretical insights: The learning and escape drivers of international expansion. Journal of Business Research, 69 (6): 1963-1972.

This study reviews the literature on multilatinas, Latin American multinationals, and provides suggestions for using these firms as a laboratory for extending existing theories and models of the multinational. Analyses of their behavior tend to discuss their upgrading of capabilities and their patterns of internationalization. An additional opportunity exists to contribute to the literature by analyzing how some of the unique characteristics of Latin American countries affect the internationalization of firms. The review explains how four characteristics of their home countries (political uncertainty, violence, pro-market reforms and reversals, and geographic isolation) can result in the foreign expansion of firms, either because managerial learning of the home country conditions facilitates internationalization (the learning driver), or because the home country conditions induce internationalization to escape those conditions (the escape driver). 

Cuervo-Cazurra, A., Andersson, U., Brannen, M. Y., Nielsen, B. B. and Reuber, R. 2016. Can I trust your findings? Trustworthy research in international business research. Journal of International Business Studies, 47(8): 881-897.

The complex nature of international business research, with its cross-country and multilevel nature, complicates the empirical identification of relationships among theoretical constructs. The objective of this editorial is to provide guidance to help international business scholars navigate this complexity and ensure that readers can trust their findings. We provide suggestions for how to rule out alternative explanations, explaining key considerations not only in empirical analyses, but also in theory building and in research design. Our discussion covers both qualitative and quantitative studies, because we believe that it is imperative to understand how trustworthiness is established in both traditions, even for international business researchers who self-identify with only one. This enables scholars to have a broader scope of knowledge when interpreting past research in the field and to be more adept at explaining their design choices to a diverse audience. 

Cuervo-Cazurra, A. Narula, R. and Un, C. A. 2015. Internationalization motives: Sell more, buy better, upgrade and escapeMultinational Business Review, 23: 25-35.

The purpose of this the paper is to review the motives for internationalization to clarify previous arguments and provide a theory-driven classification. The authors build on behavioral economics and propose a classification of internationalization motives as the result of the interaction among two dimensions, an economics-driven exploitation of existing resources or exploration of new resources, and a psychology-driven search for better host country conditions or avoidance of poor home country conditions. These two dimensions result in four internationalization motives: sell more, in which the company exploits existing resources at home and obtains better host country conditions; buy better, in which the company exploits existing resources abroad and avoids poor home country conditions; upgrade, in which the company explores for new resources, and it obtains better host country conditions; and escape, in which the company explores for new resources and avoids poor home country conditions. This theory-driven classification provides predictive power for future analyses of internationalization motives. 

Cuervo-Cazurra, A. and Narula, R. 2015. A set of motives to unite them all? Revisiting the principles and typology of internationalization motivesMultinational Business Review, 23: 2-14.

The purpose of this paper is to introduce the debate forum on internationalization motives of this special issue of Multinational Business Review. The authors reflect on the background and evolution of the internationalization motives over the past few decades, and then provide suggestions for how to use the motives for future analyses. The authors also reflect on the contributions to the debate of the accompanying articles of the forum. There continue to be new developments in the way in which firms organize themselves as multinational enterprises (MNEs), and this implies that the “classic” motives originally introduced by Dunning in 1993 need to be revisited. Dunning’s motives and arguments were deductive and atheoretical, and these were intended to be used as a toolkit, used in conjunction with other theories and frameworks. They are not an alternative to a classification of possible MNE strategies. This paper and the ones that accompany it, provide a deeper and nuanced understanding of internationalization motives for future research to build on.

Dau, L. and Cuervo-Cazurra, A. 2014. To formalize or not to formalize: Entrepreneurship and pro-market institutions. Journal of Business Venturing, 29 (5): 668-686.

In this paper, we examine the effects of pro-market institutions on both formal and informal entrepreneurship. While formal entrepreneurship has long been studied in economic literature, informal entrepreneurship has been less frequently discussed. The purpose of this paper, therefore, is not only to examine the impact of pro-market institutions, but also to foster a better understanding of, and introduce a method to measure, informal entrepreneurship. For the purpose of this paper, pro-market institutions are broken into their two main components: economic liberalization and governance levels. The arguments posit that economic liberalization positively impacts both formal and informal entrepreneurship while governance levels have a positive impact on formal entrepreneurship but a negative effect on informal entrepreneurship. Furthermore, governance levels reduce informal entrepreneurship to a greater extent than they increase formal entrepreneurship, resulting in a net reduction in entrepreneurial activity. The analyses of a panel covering 51 countries from 2002–2009 provide robust support for these arguments. 

We analyze how the quality of intellectual property rights (IPR) protection in developing countries impacts patent applications. We extend institutional economics to propose that firms vary in their interpretation of institutions, specifically arguing that foreign and domestic inventors respond to different institutional signals because of their different positions as institutional outsiders and insiders. Thus, we propose that foreign inventors, as institutional outsiders, respond more positively to the quality of IPR protection in countries with more democratic political systems, whereas domestic inventors, as institutional insiders, respond more positively to the quality of IPR protection in countries with higher quality legal systems. 

Cuervo-Cazurra, A., Martin de Holan, P., and Sanz, L. 2014. Location advantages: Emergent and guided co-evolutions. Journal of Business Research, 67(4): 508-515.

We analyze how location advantage is created and developed at the country level. We argue that location advantage can be best understood as the result of the interaction between two distinct types of co-evolutionary processes: emergent, whereby location advantage is created as the result of agglomeration dynamics in product and factor markets; and guided, whereby location advantage is created as the result of infrastructure dynamics in institutions and endowments. We illustrate empirically the application of the co-evolutionary perspective and the differences between emergent and guided co-evolutionary processes with the analysis of the development of location advantage in the Costa Rican tourism industry. 

Andersson, U., Cuervo-Cazurra, A. and Nielsen, B. B. 2014. Explaining interaction effects within and across levels of analysis. Journal of International Business Studies, 45: 1063-1071.

Many manuscripts submitted to the Journal of International Business Studies propose an interaction effect in their models in an effort to explain the complexity and contingency of relationships across borders. In this article, we provide guidance on how best to explain the interaction effects theoretically within and across levels of analysis. First, in the case of interactions within the same level of analysis, we suggest that authors provide an explanation of the mechanisms that link the main independent variable to the dependent variable, and then explain how the interaction variable modifies these mechanisms. Moreover, to ensure that the arguments are theoretically complete, we suggest that authors theoretically rule out the potential reverse interaction effect between the main variable and moderating variable. Second, in the case of interactions across levels of analysis, we suggest that authors identify the cross-level nature of the moderating relationships, specify the level of analysis of the main relationship and the nested nature of the cross-level influences, and theoretically explain these cross-level influences. Additionally, we suggest that authors pay particular attention to nesting in order to theoretically rule out reverse interactions. 

Cuervo-Cazurra, A., Caligiuri, P., Andersson, U., and Brannen, M. Y. 2013. How to write articles that are relevant to practice. Journal of International Business Studies, 44: 285-289.

Although the Journal of International Business Studies is not a practice-oriented journal, thinking deeper about the practical relevance of our articles can only help enrich them and help decision makers implement better decisions. However, while many academic articles in social sciences go to great lengths to explain their theoretical and empirical impact, in many cases their explanation of practical relevance is a paragraph in the conclusion section with a few cursory ideas that appear to be an afterthought rather than an integral part of the article. Here we provide suggestions for crafting a practical implications section that is relevant for decision makers. 

I analyze how the study of developing country multinational companies (DMNCs) can help extend theory. The renewed interest in DMNCs has generated a ‘Goldilocks’ debate, with one camp arguing that the analysis of DMNCs is ‘hot’ and requires new theory, another camp arguing that it is ‘cold’ and no new theory is required, and a third camp arguing that it is ‘just right’ and it can be used to extend theory. I follow this third camp and argue that the unique conditions of developing countries influence the internationalization of DMNCs, creating a laboratory for extending theory. I illustrate this idea by reviewing some of the key theories and models of the multinational company and explaining how they can be extended with the study of DMNCs. 

In this paper I refocus attention to the home country and explain the role it plays on the firm’s global strategy. I build on an extended view of the resource-based theory to argue that one can separate the influences of the home country on a firm’s global strategy into two types. First, a direct influence in which the home country becomes a resource for the company that helps or hinders its global strategy depending on the views of the home country in host countries. Second, an indirect influence in which specific characteristics of the home country induce the firm to create resources to operate there, and these resources, in turn, affect the firm’s global strategy. 

The paper analyses the selection of the country in which a firm starts internationalization. It proposes that some firms strategically choose a non-sequential internationalization, that is, they select a country that is dissimilar to their country of origin for their first foreign expansion. The reason for this is that some firms develop, in their home country, three types of knowledge that are useful to overcome foreign expansion difficulties: knowledge to manage complexity, developed by having multiple operations at home; knowledge to manage differences in competitive conditions, developed by operating in business-to-business industries, and knowledge to manage differences in institutional environments, developed by allying to a foreign firm at home. 

We analyse the non‐market advantages of developing‐country multinational companies (DMNCs) over advanced‐economy multinational companies (AMNCs) when both compete in the same host country. Non‐market advantages are advantages based on resources developed by the firm to operate in a country's environment. Building on the resource‐based theory and the concept of distance, we classify dimensions of a country's environment into three types (obligating, pressuring, and supporting) and argue that each type has a different impact on the advantages of DMNCs over AMNCs. First, obligating dimensions are those dimensions in which countries are not more or less developed than others; they are merely different, obligating a firm to develop particular non‐market resources to operate there. In such cases, the advantage of DMNCs over AMNCs cannot be differentiated. Instead, MNCs from more distant home countries have a disadvantage compared to MNCs from less distant countries. This is the traditional conceptualization of distance in the literature. Second, pressuring dimensions are those dimensions in which countries are more or less demanding in pressuring the firm to continuously upgrade its non‐market resources. For these dimensions, DMNCs face a disadvantage against AMNCs, because the latter have more sophisticated non‐market resources than the former. Third, supporting dimensions are those in which countries are more or less developed in their provision of external non‐market resources that support the firm's operations. In this case, DMNCs tend to enjoy an advantage over AMNCs, because the former are better at dealing with a lack of supporting resources than the latter. These last two types of dimensions challenge the commonly held ideas that distance is always directionless and always results in a disadvantage. 

Thomas, D. C., Cuervo-Cazurra, A., and Brannen, M. Y. 2011. Explaining theoretical relationships in international business research: It’s about the arrows linking the boxes. Journal of International Business Studies, 42: 1073-1078.

Distinctive features of articles accepted by the Journal of International Business Studies are that they are multidisciplinary in scope and interdisciplinary in content and methodology, and they make a substantial theoretical contribution to international business studies. Failure to meet this last requirement is an often cited reason given by reviewers for article rejection. Sometimes reviewers mean that a manuscript does not conform to the dominant paradigm, in that it is not the next logical step in the study of a phenomenon, or they mean that there is little if any integration of several theories used to explain a phenomenon. However, perhaps the most common underlying meaning when reviewers cite “lack of a theoretical contribution” for rejection is that the nature of the relationships proposed is not well explained. While the first two meanings may be influenced by the specific discipline or methodology involved, this final one is not. In this editorial, we provide a set of guidelines that authors can use to ensure that their paper meets the standard of explaining the logic of the relationships they propose. 

Cuervo-Cazurra, A., and Un, C. A. 2010. Why some firms never invest in formal R&D. Strategic Management Journal, 31(7): 759-779.

In this paper, we study the frequency of formal R&D investments. We link real options theory to the knowledge‐based view to explain how a firm's knowledge resources influence its frequency of investing in R&D to establish technological options. Specifically, we propose that a firm that lacks internal knowledge resources is more likely to never invest in R&D, a firm that has both internal and external knowledge resources is more likely to sometimes invest in R&D, while a firm that has internal knowledge resources but lacks external knowledge resources is more likely to always invest in R&D. 

Un, C. A., Cuervo-Cazurra, A., and Asakawa, K. 2010. R&D collaborations and product innovation. Journal of Product Innovation Management, 27(5): 673-689.

This paper studies the relative impact on product innovation of research and development (R&D) collaborations with universities, suppliers, customers, and competitors. It argues that each type of R&D collaboration differs in terms of the breadth of new knowledge provided to the firm and in the ease of access of this new knowledge, resulting in a different impact on product innovation. As a result, it proposes that R&D collaborations with universities are likely to have the highest impact on product innovation, followed by R&D collaborations with suppliers, customers, and, finally, competitors. These arguments are tested on the R&D collaborations undertaken by a sample of 781 manufacturing firms during 1998–2002. The tests find that R&D collaborations with suppliers have the highest positive impact on product innovation, followed by collaborations with universities. Surprisingly, R&D collaborations with customers do not appear to affect product innovation, and collaborations with competitors appear to harm it. Moreover, the positive influence of R&D collaborations with universities and suppliers is sustained over the long‐term, but the negative influence of R&D collaborations with competitors is, fortunately, short‐lived. These findings indicate that ease of knowledge access, rather than breadth of knowledge, appears to drive the success of R&D collaborations for product innovation. R&D collaborations with suppliers or universities, which are characterized by relatively easy knowledge access, have a positive influence on product innovation, whereas R&D collaborations with customers or competitors, which are characterized by reduced ease in knowledge access, are not related or are even negatively related to product innovation. Moreover, to achieve product innovation with the help of R&D collaborations, it appears that the collaboration must first have mechanisms in place to facilitate the transfer of knowledge; once these are in place, it is better if the partner has a relatively narrow knowledge base. Thus, while R&D collaborations with both suppliers and universities are positively related to product innovation, the narrow knowledge base provided by collaborations with suppliers appears to have a larger positive impact on product innovation than the wider knowledge base provided by collaborations with universities. These arguments and findings are important and novel. The paper is one of the first to theoretically explain and empirically show that various types of collaborations have a differential influence on product innovation. It goes beyond previous literature by providing a theoretical logic for ranking the likely impact of types of collaborations on product innovation. The study also suggests to managers to carefully select the partners for their firms' R&D collaborations. Collaborations with suppliers appear to be the most promising for product innovation, followed by collaborations with universities, whereas collaborations with competitors may be detrimental to product innovation. 

Cuervo-Cazurra, A., and Dau, L. A. 2009. Pro-market reforms and firm profitability in developing countries. Academy of Management Journal, 52(6): 1348-1368.

This study proposes that promarket reforms positively affect firms' profitability in developing countries because the accompanying improvements in external monitoring decrease firms' agency costs. We also argue that firms benefit unequally from promarket reforms because their agency problems are affected differently, proposing that promarket reforms improve profitability more for domestic state-owned and domestic private firms than for subsidiaries of foreign firms. Analyses of the 500 largest firms in Latin America from 1989 to 2005 support the arguments, suggesting that, contrary to the views of many critics of globalization, domestic firms are the main beneficiaries of promarket reforms in developing countries. 

Cuervo-Cazurra, A., and Dau, L. A. 2009. Structural reform and firm exports. Management International Review, 49(4): 479-507.

We analyze the impact of structural reform on firm exports. We argue that structural reform generates new opportunities and reduces transaction costs, inducing firms to improve their efficiency and competitiveness to international levels, therefore, helping them to export. However, we propose that not all companies benefit equally, because firms differ in how structural reform affects their competitiveness. We argue that subsidiaries of foreign firms are the main beneficiaries of structural reform, followed by domestic private firms, and finally by domestic state-owned firms. We test these arguments on a sample of the largest companies in Latin America for the period 1990–2005. We find that structural reform induces firms to export. Furthermore, it has the highest positive impact on the exports of subsidiaries of foreign firms, followed by those of domestic private firms. Surprisingly, we find that structural reform has a negative impact on the exports of domestic state-owned firms. The paper contributes to a better understanding of how changes in institutions affect firm behavior by explaining the mechanisms that link structural reform to firm exports and how these vary across firms. Moreover, by indicating that not only foreign but also domestic private firms benefit from structural reform, it counters the arguments of detractors of globalization who claim that foreign firms are the sole beneficiaries of structural reform. The paper also highlights the need to discuss who benefits from structural reform rather than whether structural reform is beneficial or detrimental. 

Un, C. A., and Cuervo-Cazurra, A. 2008. Do subsidiaries of foreign MNEs invest more in R&D than domestic firms? Research Policy, 37(10): 1812-1828.

Despite the growing involvement of multinational enterprises (MNEs) in foreign-based research and development (R&D), there has been little research comparing R&D investments of subsidiaries of foreign MNEs to domestic firms. Subsidiaries of foreign MNEs enjoy advantages that help them compete against domestic firms. However, when deciding on R&D investments, these advantages exert competing influences on their R&D investment decision. On the one hand, better access to and transfer of knowledge and technologies from the MNE and other subsidiaries and centers of excellence may encourage the subsidiary of a foreign MNE to invest less in R&D relative to a domestic firm. On the other hand, better access to sources of capital through the MNE and other subsidiaries may induce the subsidiary to invest more in R&D in comparison to domestic firms. We find that subsidiaries of foreign MNEs invest less in total R&D than domestic firms. The reason is that they invest less in external R&D than domestic firms; however, they have similar internal R&D investments compared to domestic firms. These findings support the notion that the transfer of technology and knowledge from other parts of the MNE acts as a substitute for the purchase of external R&D while internal R&D acts as a complement to the technology and knowledge transferred from other parts of the MNE. 

Cuervo-Cazurra, A., and Genc, M. 2008. Transforming disadvantages into advantages: Developing country MNEs in the least developed countries. Journal of International Business Studies, 39(6): 957-979.

We analyze the advantages and disadvantages of developing-country multinational enterprises (MNEs) in comparison with developed-country MNEs. Developing-country MNEs tend to be less competitive than their developed-country counterparts, partly because they suffer the disadvantage of operating in home countries with underdeveloped institutions. We argue that this disadvantage can become an advantage when both types of MNE operate in countries with “difficult” governance conditions, because developing-country MNEs are used to operating in such conditions. The empirical analysis shows that, although developing-country MNEs rarely appear among the largest MNEs in the world, they are more prevalent among the largest foreign firms in the least developed countries (LDCs), especially in LDCs with poorer regulatory quality and lower control of corruption. 

Cuervo-Cazurra, A. 2008. The multinationalization of developing country MNEs: The case of Multilatinas. Journal of International Management, 14(2): 138-154.

I study the multinationalization — the decision to establish foreign direct investment (FDI) — of developing country firms, in particular Latin American ones or “Multilatinas”. Despite a long exporting tradition, many firms in Latin America have only recently become multinational enterprises (MNEs). The analysis of case studies reveals three insights. First, Multilatinas take a long time to become MNEs, reflecting the additional challenges and need for sophisticated advantages for establishing FDI. Second, Multilatinas are induced to become MNEs after changes in the home country that follow structural reform induce them to upgrade their competitiveness to international levels. As a result, they can overcome the difficulties of establishing FDI and become MNEs. Third, Multilatinas follow four strategies in their selection of the country where to establish FDI first depending on the interplay between difficulties and advantages of operating abroad. These three arguments build on and link the notion of advantages of internationalization put forward by the eclectic paradigm of international production and the idea of difficulties in internationalization presented by the incremental internationalization model. The strategies are explained by the balancing of the ease of overcoming difficulties and the advantages derived from foreign operations. 

Cuervo-Cazurra, A., Maloney, M., and Manrakhan, S. 2007. Causes of the difficulties in internationalization. Journal of International Business Studies, 38(6): 709-725.

We study the causes of the difficulties faced by firms when they internationalize in search of new markets. We build on the resource-based theory to argue that the difficulties in internationalization can be separated into three main sets based on their relationship to advantage: loss of advantage provided by resources transferred abroad; creation of a disadvantage by resources transferred abroad; and lack of complementary resources required to operate abroad. In each set, we further distinguish difficulties that are specific to a firm from those that are common to a set of firms. We argue that only a few of the resulting types of difficulties of internationalization are exclusive to the cross-border expansion, and propose solutions that address the root cause of each type. 

Cuervo-Cazurra, A. 2007. Sequence of value-added activities in the internationalization of developing country MNEs. Journal of International Management, 13(3): 258-277.

This paper studies the sequence of value-added activities in the multinationalization of firms from developing countries. Analysis of twenty Latin American multinational firms, or Multilatinas, reveals three alternative sequences: start multinationalizing with marketing subsidiaries in all countries, start multinationalizing with production subsidies in all countries, or start multinationalizing with marketing subsidiaries in some countries and production subsidiaries in others. These alternative sequences are explained through the integration and extension of arguments from the incremental model of internationalization and its discussion of difficulties, and the eclectic paradigm of foreign production and its discussion of advantages. I argue that firms that benefit from a location advantage in the country of origin are more likely to start multinationalizing using marketing subsidiaries, firms that benefit from a location advantage in the host country are more likely to start multinationalizing using production subsidiaries, and firms that face difficulties in the transfer of products across countries are more likely to start multinationalizing using production subsidiaries. 

Cuervo-Cazurra, A., and Un, C. A. 2007. Regional economic integration and R&D investment. Research Policy, 36(2): 227-246.

We analyze the influence of a regional economic integration agreement (REIA) on a firm's investments in research and development (R&D). A country's entry into a REIA creates two competing influences on the firm's R&D investments. On the one hand, increased competition in product markets after the REIA would induce the firm to invest in internal R&D to improve its distinctive technological competitiveness. On the other hand, better access to sources of inputs in factor markets after the REIA would induce the firm to purchase external R&D because it can outsource technology more easily. Surprisingly, the empirical analysis shows that the REIA's impact on R&D investment is driven primarily by product markets rather than by factor markets. After the REIA, product markets induce firms not only to invest more in internal R&D but also purchase more external R&D. In contrast, after the REIA factor markets have limited influence on internal or external R&D investments.

Un, C. A., and Cuervo-Cazurra, A. 2004. Strategies for knowledge creation in firms. British Journal of Management, 15(S1): 27-41.

We extend the knowledge‐based view by providing an explanation of how firms develop the capability to create knowledge. We take the view that firms are distributed knowledge systems composed of individuals who embody knowledge, and theoretically identify and empirically test the existence and effectiveness of two strategies – organization and project team – that promote their interactions to develop this capability. On the one hand, building on what we call the organization‐level innovation literature, we identify the organization strategy, which suggests investment in organization‐level integrative management practices to facilitate interactions to create knowledge among individuals situated in different parts of the system, independently of when a knowledge‐creation task is established and individuals are organized to create knowledge. On the other hand, building on what we call the team‐level innovation literature, we identify the project team strategy, which suggests investment in project team‐level integrative management practices to facilitate interactions to create knowledge among individuals once a knowledge‐creation task is defined and individuals are placed into teams to create knowledge. The two strategies are substitute approaches for the development of the capability, although the organization strategy appears to better predict outcomes of the capability. However, this approach might be more costly, so not all managers will choose to follow it. 

Journal articles on global sustainable governance

Cuervo-Cazurra, A., Purkayastha, S., & Ramaswamy, K. 2023. Variations in the corporate social responsibility-performance relationship in emerging market firms. Organization Science (forthcoming).

Corporate social responsibility (CSR) and its impact on performance have generated a debate that has evolved across several perspectives (shareholder, stakeholder, resource-based, and contingency). Building on the resource-based and contingency perspectives, we shed new light on this debate by analyzing the impact of CSR on performance in emerging market firms, advancing the idea that CSR is a mechanism that helps address market failures. We first argue that CSR’s three constituent dimensions (environmental, social, and governance) vary in their impact on performance because each dimension has a different mitigating effect on market failures that hobble emerging market firms. Specifically, we contend that social CSR has a more significant effect on performance than either governance CSR or environmental CSR for emerging market firms, because the former helps build capabilities that more directly reduce the negative consequences of inadequacies in the availability of public goods and services that firms need to operate efficiently. We then provide additional depth to this idea by arguing that other mechanisms used for mitigating market failures in an emerging market context, namely firm-level business group affiliation and country-level government policy nudges, strengthen this differential influence of each of the three dimensions of CSR on performance. Analyses of a sample of 89 publicly traded Indian firms from 2007 to 2017 support these arguments.

Cuervo-Cazurra, A., Colpan. A. 2023. Owners' nonfinancial objectives and the diversification and internationalization of business groups. Corporate Governance: An International Review (forthcoming).

Building on agency theory, we separate business groups into five types based on their ultimate controlling owners (state, labor, family, mutual, and bank) and identify their nonfinancial objectives. We argue that their nonfinancial objectives result in diverging levels of diversification and internationalization of business groups across owner types. Specifically, we propose that state-owned and bank-owned business groups have a relatively high level of diversification, labor-owned and mutual-owned business groups have a relatively moderate level, and family-owned business groups have a relatively low level. We also argue that state-owned and labor-owned business groups have a relatively low level of internationalization, family-owned business groups have a relatively moderate level, and mutual-owned and bank-owned business groups have a relatively high internationalization level. We add depth to these ideas by proposing that pro-market reforms alter owners’ ability to achieve their nonfinancial objectives, leading to diverging changes in business groups’ diversification and internationalization across owner types. Specifically, we propose that following pro-market reforms, state-owned and bank-owned business groups experience a large decrease in their level of diversification, labor-owned and mutual-owned business groups see a moderate decrease, and family-owned business groups have a small decrease. We also argue that pro-market reforms lead state-owned and labor-owned business groups to have a small increase in their level of internationalization, family-owned a moderate increase, and mutual-owned and bank-owned to experience a large increase.

Cuervo-Cazurra, A., Grosman, A., & Wood, G. 2003. Cross-country variations in Sovereign Wealth Funds' transparency. Journal of International Business Policy (forthcoming).

We explore the drivers of the variation in sovereign wealth funds’ transparency across countries. Sovereign wealth funds have emerged as an important instrument for governments to invest and manage excess funds. However, despite serving similar needs, they vary significantly across countries. We integrate agency theory with the varieties of capitalism framework to propose that the country’s governance characteristics drive sovereign wealth funds’ multi-level agency problem, i.e., politicians acting as intermediaries between the citizens who are the nominal owners and the funds’ managers, leading to cross-country variations in the sovereign wealth funds’ characteristics. As a result, we propose that the home country’s type and quality of government and the origin of the wealth drive cross-country variations in the transparency of the sovereign wealth funds. We provide public policy suggestions for addressing these agency problems and improving sovereign wealth fund behavior.

Cuervo-Cazurra, A., Grosman, A., & Megginson, W. 2022. A review of the internationalization of state-owned firms and sovereignwealth funds: governments nonbusiness objectives and discreet power. Journal of International Business Studies, (forthcoming).

We review and bridge the literature on the internationalization of state-owned firms and sovereign wealth funds to provide a novel understanding of how government ownership affects foreign investments in three ways. First, we explain how state-owned firms and funds behave differently from private ones because they need to balance governments’ nonbusiness objectives and firms’ business goals. This results in competing predictions on whether government ownership helps or hinders internationalization due to particular nonbusiness objectives. Second, building on the review, we provide suggestions on how to extend research topics and theories of the firm by incorporating these nonbusiness objectives in the internationalization decisions in four areas: home government’s endowments, characteristics, and attitudes; host-country expansion’s support, influence, and impact; home- and host-country relationship conflicts, mediation, and disguising; and management’s orientation, opacity, and arbitrage. Third, we capture how governments may use state-owned multinationals and sovereign wealth funds to nudge host-country governments by introducing the concept of discreet power and the use of four strategies (recognition, values, development, and supremacy) to achieve it. This helps to outline the beginning of a unified approach to how governments use their foreign investments to achieve nonbusiness goals.

Montiel, I., Cuervo-Cazurra, A., Park, J., Antolín-López, R. and Husted, B.W. 2021. Implementing the United Nations’ Sustainable Development Goals in international business. Journal of International Business Studies, 52: 999-1030.

Building on the concept of externalities, we propose an explanation of how multinationals can contribute to the enactment of the United Nations’ Sustainable Development Goals as part of their ordinary investments. First,we suggest grouping the 17 Sustainable Development Goals into six categories based on whether they increase positive externalities – knowledge, wealth, or health – or reduce negative externalities – the overuse of natural resources, harm to social cohesion, or overconsumption. Second, we propose placing these categories within an extended value chain to facilitate their implementation. Third, we argue that multinationals’ internal investments in host-country subsidiaries to improve their competitiveness contribute to addressing externalities in host-country communities, while external investments in host communities to solve underdevelopment generate competitiveness externalities on host-country subsidiaries.

Cuervo-Cazurra, A., Dieleman, M., Hirsch, P., Rodrigues, S. B., and Zyglidopoulos, S. 2021. Multinationals’ misbehavior. Journal of World Business, 56 (5): 101244.

Multinational companies have been a force for good but, unfortunately, some misbehave. Our comprehensive literature review on multinationals’ misbehavior reveals three ideas. First, most research focuses on the interaction between the multinational and its institutional context, but insights vary depending on whether the drivers of misbehavior lie inside or outside the multinational. Second, we find a dearth of studies on social and environmental misbehavior, and an overemphasis on the study of governance dimensions, especially corruption. Third, we uncover three implicit assumptions that shaped past analyses: data availability, bad contexts leading good multinationals astray, and a focus on topical novelty.

Cuervo-Cazurra, A., & Li, C. 2021. State ownership and internationalization: The advantage and disadvantage of stateness. Journal of World Business, 56 (1): 101112. 

We critically review the literature on state-owned multinationals to clarify previous arguments and guide future studies. The content analysis of prior research reveals that state-owned firms differ from private firms in their internationalization: they are motivated by national strategic objectives, select more challenging countries, and use acquisitions more intensively despite adverse market reactions. The analysis also reveals conflicting predictions on the level of internationalization; some studies find that state-owned multinationals internationalize more while others find the contrary. We introduce one solution to these conflicts by classifying theories into two camps based on the balance between the costs and benefits of state ownership. One camp suggests a disadvantage of stateness (agency theory, resource dependence theory, and neo-institutional theory). Another camp promotes an advantage of stateness (economic development, resource-based view, and institutional economics). We conclude by outlining three promising relationships in the study of these firms: (1) relationships internal to state-owned multinationals and the balancing of stakeholder demands; (2)relationships between state-owned multinationals and government and the influence of the political system; and (3) relationships between home and host country governments and the impact of their dynamics on state-owned multinationals.

Kalasin, K., Cuervo-Cazurra, A., & Ramamurti, R. 2020. State ownership and international expansion: The S‐Curve relationship. Global Strategy Journal, 10(2): 386-418. 

We study how state ownership affects the international expansion of emerging‐market firms. Building on agency theory and the resource‐based view, we propose an S‐curve relationship: Firms with a low level of state ownership have a limited level of international expansion, those with a medium level of state ownership have an increasing level, and those with a high level of state ownership have a decreasing level. This S‐curve is the outcome of the interaction between the “hindering hand” of state ownership, arising from multilevel agency problems, and the “helping hand,” arising from state‐ownership advantages. Analyses of 674 publicly traded firms from 16 emerging markets support these ideas and reveal that the inflection points in the S‐curve appear at state‐ownership levels of 19 and 43%.

Cuervo-Cazurra, A. 2018. The evolution of business groups’ corporate social responsibilityJournal of Business Ethics, 153 (4): 997-1016.

In this theoretical paper, I analyze business groups’ corporate social responsibility (CSR). Building on economic thinking, I propose that the level and diversity of CSR investments of business groups evolve with the development of the country, as a result of the interaction of two drivers: the level of infrastructure deficiencies and the cost of negative externalities. I argue that in underdeveloped countries, business groups have high levels and low diversity of CSR investments, focusing on the social arena to compensate for infrastructure deficiencies. As countries implement pro-market reforms and become emerging economies, the level of CSR investments diminishes as business groups can rely on external providers and the government for supporting infrastructure, but CSR diversity increases to address the growing costs of negative externalities in the environmental and economic arenas. As countries further develop to become advanced economies, business groups’ level and diversity of CSR investments increase to prevent the high costs of negative externalities in the social, environmental, and economic arenas proactively.

Cuervo-Cazurra, A. 2016. Corruption in international business. Journal of World Business, 51: 35-49.

I analyze corruption in international business, presenting a critical assessment of the topic and providing suggestions for future research. I argue that corruption creates a laboratory for expanding international business studies because its illegal nature, the differences in perception about illegality, and the variation in the enforcement of laws against bribery across countries challenge some of the assumptions upon which arguments have been built, i.e., that managers can choose appropriate actions without major legal implications. Hence, I first provide suggestions for how to analyze the topic of corruption in future studies by analyzing the types, measures, causes, consequences, and controls of corruption. I then provide suggestions for how to extend leading theories of the firm by using corruption as a laboratory that challenges some of the assumptions of these theories: extending agency theory by analyzing the existence of unethical agency relationships; extending transaction cost economics by analyzing illegal transaction costs minimization; extending the resource-based view by studying corporate social irresponsibility capability; extending resource dependency by analyzing the ethical power escape; and extending neo-institutional theory by studying illegal legitimacy.

Cuervo-Cazurra, A. Inkpen, A., Musacchio, A. and Ramaswamy, K. 2014. Governments as owners: State-owned multinational companies. Journal of International Business Studies, 45: 919-942.

The globalization of state-owned multinational companies (SOMNCs) has become an important phenomenon in international business (IB), yet it has received scant attention in the literature. We explain how the analysis of SOMNCs can help advance the literature by extending our understanding of state-owned firms (SOEs) and multinational companies (MNCs) in at least two ways. First, we cross-fertilize the IB and SOEs literatures in their analysis of foreign investment behavior and introduce two arguments: the extraterritoriality argument, which helps explain how the MNC dimension of SOMNCs extends the SOE literature, and the non-business internationalization argument, which helps explain how the SOE dimension of SOMNCs extends the MNC literature. Second, we analyze how the study of SOMNCs can help develop new insights of theories of firm behavior. In this respect, we introduce five arguments: the triple agency conflict argument in agency theory; the owner risk argument in transaction costs economics; the advantage and disadvantage of ownership argument in the resource-based view (RBV); the power escape argument in resource dependence theory; and the illegitimate ownership argument in neo-institutional theory. After our analysis, we introduce the papers in the special issue that, collectively, reflect diverse and sophisticated research interest in the topic of SOMNCs.

Aguilera, R., and Cuervo-Cazurra, A. 2009. Codes of good governance. Corporate Governance: An International Review, 17(3): 376-387.

We review the recent developments in the area of codes of good governance, a set of best practice recommendations regarding the behavior and structure of the board of directors. Our review of the literature on codes of good governance highlights their rapid spread around the world and how academic research has lagged behind in analyzing this topic. Despite the criticism that the codes' voluntary nature limits their ability to improve governance practices, codes of good governance appear to have generally improved the governance of countries that have adopted them, although there is a need for additional reforms. Unfortunately, research on codes of good governance has developed in isolation with little cross‐fertilization across the different disciplines. We propose a multi‐level framework to discuss three main topics that have emerged within the codes literature: the motivations behind the diffusion of codes across countries and its implications for convergence of corporate governance practices; the content of the codes and their “comply or explain” dimension; and the relationship between code compliance and firm performance. We conclude by proposing four areas of future research. Code development, adoption, and compliance are directly related to issues surrounding the governance of the firm, and in particular to all the interactions that a director has inside and outside the firm. Codes are regulations that emerge from policy‐making negotiations between multiple stakeholders, such as the state (via the stock market regulators) and the investors. 

Cuervo-Cazurra, A. 2008. The effectiveness of laws against bribery abroad. Journal of International Business Studies, 39(4): 634-651.

I analyze the effectiveness of laws against bribery abroad in inducing foreign investors to reduce their investment in corrupt countries. The laws are designed to reduce the supply of bribes by foreign investors by increasing the costs of bribing abroad. Such an increase in costs will make foreign investors more sensitive to corruption and induce them to reduce their investments in corrupt countries. However, I argue that these laws need to be implemented and coordinated in multiple countries to become effective. Otherwise, investors in a country will have incentives to bypass them when competitors from other countries are not bound by similar legal constraints. The empirical analysis shows that investors from countries that implemented the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transaction of 1997 reduced their investments in corrupt countries. Investors from the US, which were bound by the Foreign Corrupt Practices Act of 1977, also reduced investments in corrupt countries, but only after the OECD Anti-Bribery Convention was in place. 

Cuervo-Cazurra, A. 2008. Better the devil you don’t know: Type of corruption and FDI in transition economies. Journal of International Management, 14(1): 12-27.

Corruption has a negative impact on foreign direct investment (FDI). However, transition economies show high levels of corruption and also high levels of FDI. I argue that it is not the level but rather the type of corruption that affects FDI in transition economies. Pervasive corruption, or corruption that is widely present, acts as a deterrent to FDI because it increases the known costs of investing, while arbitrary corruption, or corruption that is uncertain, does not have such a deterring influence because it becomes part of the uncertainty of operating in transition economies. In transition economies, investors prefer to deal with an unknown evil – arbitrary corruption – rather than a known one – pervasive corruption.

Cuervo-Cazurra, A. 2006. Who cares about corruption? Journal of International Business Studies, 37(6): 803-822.

This paper examines the impact of corruption on foreign direct investment (FDI). It argues that corruption results not only in a reduction in FDI, but also in a change in the composition of the country of origin of FDI. It presents two key findings. First, corruption results in relatively lower FDI from countries that have signed the Organization for Economic Cooperation and Development Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. This suggests that laws against bribery abroad may act as a deterrent against engaging in corruption in foreign countries. Second, corruption results in relatively higher FDI from countries with high levels of corruption. This suggests that investors who have been exposed to bribery at home may not be deterred by corruption abroad, but instead seek countries where corruption is prevalent. 

Cuervo-Cazurra, A. 2006. Business groups and their types. Asia Pacific Journal of Management, 23(4): 419-437.

We clarify what business groups are and analyze their various types. We first distinguish business groups from other types of firm networks based on the strategic relationships among companies; business groups are defined as those networks that exhibit unrelated diversification under common ownership. We then separate business groups into three types based on their ownership: family-owned, widely-held, and state-owned. We argue that each type has different agency costs and diversification logics. As a result of these differences, their performance varies, with family-owned business groups outperforming widely-held ones, and these in turn outperforming state-owned business groups.

Aguilera, R., and Cuervo-Cazurra, A. 2004. Codes of good governance worldwide: What is the trigger? Organization Studies, 25(3): 417-446.

This article examines the mechanisms underlying the worldwide diffusion of organizational practices. We suggest that the two main theoretical explanations in the diffusion literature, efficiency, and legitimation, can be complementary. More specifically, we argue that endogenous forces seek to enhance the efficiency of existing systems, while exogenous forces seek to increase legitimation. To assess our argument, we explore the worldwide diffusion of codes of good governance. These codes are a set of ‘best practice’ recommendations regarding the behavior and structure of a firm’s board of directors issued to compensate for deficiencies in a country’s corporate governance system regarding the protection of shareholders’ rights. We have collected data on codes of good governance for 49 countries. We operationalize efficiency needs in terms of the characteristics of shareholder protection, and legitimation pressures in terms of government liberalization, economic openness, and the presence of foreign institutional investors. Our analysis supports the argument that both efficiency needs and legitimation pressures lead to code adoption. In addition, our empirical results show that countries with legal systems with strong shareholder protection rights tend to be more prone to develop codes, possibly for efficiency reasons. This article contributes to organization theory by illustrating that the diffusion of codes fosters both cross-national corporate governance convergence as well as some degree of country hybridization, particularly depending on the type of code issuer.

Books on global strategic management

Cuervo-Cazurra, A. & Montoya, M. (Eds). 2021. Innovating for the Middle of the Pyramid in Emerging Markets. Cambridge, UK: Cambridge University Press.

The transformation of emerging markets in recent decades has generated a new, growing, and very large middle class market, also known as the middle of the pyramid. This market segment, which is middle by the standards of emerging markets yet low by the standards of advanced economies, is extremely attractive for firms, but still understood and underserved. This volume presents detailed analyses of exemplary firms that have innovated products, services, and business models to fulfil the needs and desires of these new middle classes. It provides useful insights for managers, consultants, researchers, and students interested in emerging economies, and actionable lessons on how to innovate for a new and expanding market segment.

Cuervo-Cazurra, A., Newburry, W., & Park, S. (Eds) 2020. Building Strategic Capabilities in Emerging Markets. Cambridge, UKCambridge University Press.

Firms in emerging markets are becoming leading global players despite operating in challenging home country environments, but little is known about how they build their capabilities. By analyzing multiple companies operating across over a dozen emerging markets in Asia, Latin America, Africa and Europe, the authors identify the specific challenges faced by emerging market firms to become internationally competitive. Furthermore, they provide actionable solutions to upgrading capabilities, sustaining competitive advantage, and achieving multinational status, all whilst operating in emerging economies. Featuring contributions from eminent business scholars from across the globe, this timely volume provides a valuable tool for academics and practitioners, managers and consultants, especially those involved with emerging market firms working to grow and succeed globally..

Cuervo-Cazurra, A. & Montoya, M. (Eds). 2018. Mexican Multinationals: Building Multinationals in Emerging MarketsCambridge, UK: Cambridge University Press.

Over the past two decades, emerging market multinationals have become an important force in international business. This book provides a better understanding of the actions and strategies used by firms from mid-sized emerging markets to upgrade their capabilities and become successful multinationals. It is the first book to provide an in-depth look at Mexican multinationals, or 'Multimexicans'. These include some of the leading firms in the world, such as the construction materials producer Cemex and the tortilla maker Grumasa, as well as smaller but innovative firms such as the theme park Kidzania and the cinema multicomplex Cinepolis. This comprehensive analysis contains case studies written by local industry experts on these and other firms, across twenty-two industries. The lessons drawn will be of interest to researchers, students, and consultants, as well as managers and executives of firms in other emerging markets looking to upgrade capabilities and expand abroad.

 Cuervo-Cazurra, A., Newburry, W., & Park, S. 2016. Emerging Market Multinationals: Solving Operational Challenges in Internationalization. Cambridge, UK: Cambridge University Press.

Emerging market multinationals are becoming leaders in their industries, able to compete on equal terms with firms from advanced economies, but their paths toward global leadership are not always smooth. This book examines the specific challenges faced by emerging market multinationals as they seek to develop their international operations and proposes actionable solutions for them. The authors seamlessly combine academic analyses with a rich selection of real-world cases to provide a clear framework for understanding some of the barriers that prevent firms from emerging economies from succeeding abroad and show readers what actions can be taken to achieve sustained international growth. With clear, concise arguments and examples that bring the discussion to life, this insightful book will appeal to managers and students alike.

 Cuervo-Cazurra, A., & Ramamurti, R. (Eds). 2014. Understanding Multinationals from Emerging Markets. Cambridge, UK: Cambridge University Press.

Why have relatively poor and underdeveloped countries been able to spawn so many global firms in the last two decades? Are emerging market multinationals (EMNCs) really different from successful multinationals from developed economies? This book tackles these and other fundamental theoretical questions about EMNCs. A distinguished group of researchers assesses the unique strategies and behavior of successful EMNCs, from the Chinese telecommunications firm Huawei to the Indian conglomerate Tata, to the South African beverages firm SABMiller. They address a range of topics, such as the drivers of internationalization by EMNCs; their distinctive process capabilities; how they catch up with established rivals on technology; how state ownership or business-group affiliation affects their behavior; and why they sometimes relocate their headquarters to advanced economies. This book will appeal to scholars and graduate students in global strategy and international business, as well as consultants of multinational companies, looking for state-of-the-art analysis of EMNCs.

Books on global sustainable governance

Wright, M., Wood, G., Cuervo-Cazurra, A., Sun, P., Okhmatovskiy, I., Grosman, A. 2022. OxfordHandbook on State Capitalism and the Firm. Oxford: Oxford University Press.

There has been a major revival of interest in State Capitalism: what it is, where it is found, and why it is seemingly becoming more ubiquitous. As a concept, it has evolved from radical critiques of the Soviet Union, to being deployed by neo-liberals to describe market reforms deemed imperfect, to settle into a middle ground, as a pragmatic way to describe the state assuming a role as an active economic agent, in addition to its regulatory, social, and security functions. The latter is the central focus of this book, although due attention is accorded to the origins of state capitalism and how it has changed over the years, as well as contemporary ways in which state capitalism may be theorized. This economic agency may assume direct forms, for example, via state owned enterprises. However, it may also be indirect, for example, actively serving private interests through promoting insider firms, who may occupy monopolistic market positions and perform outsourced state functions. In turn, this leads to raising salient governance questions. The latter may encompass agency tensions between public ownership, and political or even private interest control; it may also include issues of transparency and monitoring. Although state capitalism has often been depicted as the preserve of states in the global south, be they developmental or predatory, many forms of state capitalism are visible in mature economies, be they liberal or coordinated, and this is not always associated with superior governance arrangements; indeed, this is an area where clear and easy divisions between the "developing" or "emerging" world and the "developed" or "mature" world may increasingly be breaking down. This volume brings together the accounts of leading experts from around the world; it is explicitly multi-disciplinary, and both consolidates the exiting knowledge base, and provides new, novel, and counter-intuitive insights.

Cuervo-Cazurra A. (Ed). 2018. State-Owned Multinationals: Governments in Global Business. Cham, Switzerland: Palgrave MacMillan.

This book provides a deep understanding of state-owned multinationals (SOMNCs) and their role in global business. SOMNCs have emerged as a force to contend with in global competition, and their study connects several fields such as economics, political economy, international business and global strategy. This prestigious collection of articles presents insights into the interaction between government ownership and internationalization, and aims to provoke new research approaches and insights on the topic. The book includes some of the key contributions to our understanding of these firms and new commentaries explaining how to analyze them. This book is essential reading for academics and consultants looking to gain a clearer understanding of SOMNCs and how to research them.

Book chapters on global strategic management

Tallman, S., & Cuervo-Cazurra, A. 2021. Global strategy. Duhaime, I., Hitt, M., Lyles, M. (eds). Strategic Management: State of the Field and Its Future. Oxford: Oxford University Press.

We provide an overview of research on global strategy and outline suggestions for future studies. The field has generated three critical decisions: (1) expansion (whether to internationalize and how to select countries and entry modes to ensure effectiveness), (2) management  (how to structure, coordinate, and control operations dispersed across countries to achieve efficiency) and (3) advantage (how to build an advantage in scale, learning, and arbitrage across locations to guarantee success). Future research can provide novel insights on these decisions by analyzing the impact of changes in three contexts: (1) countries, and the dynamics in cross-border interactions emerging from globalization, emerging markets, and government activism; (2) industries, and the reorganization of firm boundaries arising from digitalization, big data, and global value chains; and (3) and organizations, and the reconsideration of the nature of work derived from global expertise, dispersed collaboration, and the gig economy. 

Cuervo-Cazurra, A., Rodriguez, A., and Un, A. 2021. Internationalization of Emerging Markets Multinationals: The role of the underdevelopment of the home country. In Mellahi, K., Meyer, K., Narula, R., Surdu, I., and Verbeke, A. (eds.) Oxford Handbook of International Business Strategy. Oxford: Oxford University Press.

This chapter analyzes the internationalization of emerging-market multinationals to clarify past contributions and outline suggestions for future research. We critically review the novelty of the phenomenon associated with the foreign expansion of firms from emerging markets, the new theoretical concepts introduced from analyzing these firms, and the new explanations related to their internationalization. We propose that future research can advance our understanding of these firms by studying how the underdevelopment of the home country’s economy and institution influences firms’ internationalization. We specifically discuss four areas that can yield promising insights: frugal innovation, contractual innovation, upgrading escape, and institutional escape.

Pananond, P. and Cuervo-Cazurra, A. 2018. The complementarity of foreign and domestic investment by emerging market multinationals. In Castellani, D., Narula, R., Nguyen, Q., Surdu, I. and Walker, J. (Eds) 2018. Contemporary Issues in International Business: Institutions, Strategy and Performance. Palgrave McMillan.

We analyse the impact of foreign direct investment on domestic investment by emerging market firms. This relationship underlies a key policy debate on whether and how home-country governments should support outward foreign direct investment. While some governments are strongly in favour of supporting their firms’ overseas expansion, many are hesitant as outward foreign investment is considered to replace domestic investment and thus harmful to the home economy. We argue that emerging market firms’ foreign expansion complements rather than substitutes their domestic investment because foreign direct investment enables these firms to increase their efficiency and improve their value chain positioning. 

Cuervo-Cazurra, A. 2018. Multimexicans: An Introduction. In Cuervo-Cazurra, A. and Montoya, M. (Eds). Mexican Multinationals: Building Multinationals in Emerging Markets. New York: Cambridge University Press. Pages 1-28.

This chapter explains the benefit of analyzing Mexican multinationals, MultiMexicans, as a laboratory for better understanding of the internationalization of emerging market firms. MultiMexicans are increasingly expanding across countries, and some have become leading firms in their industries. The chapter provides, first, a review of the traditional models of the multinational, which have been based on the study of firms from advanced economies: those that explain the existence of multinationals (the OLI framework, the internalization model, and the knowledge-based view) and those that explain the internationalization process (the product lifecycle model, the incremental internationalization model, and the innovation related model). It then presents a review of models introduced to explain emerging market multinationals: the LLL model, the springboard model, the “new” model of the multinational, and the non-sequential internationalization model. Building on these, the chapter then explains how the analysis of MultiMexicans helps better understand the internationalization of emerging market firms by taking into account the influence of the home country on firm internationalization, and the tradeoffs that emerging market firms face as they expand abroad. The chapter concludes with a summary of the contents of the book and the lessons drawn from the comparison of MultiMexicans in multiple industries. 

Cuervo-Cazurra, A. 2018. Conclusions: Building Multinationals in Emerging Markets. In Cuervo-Cazurra, A. and Montoya, M. (Eds). Mexican Multinationals: Building Multinationals in Emerging Markets. New York: Cambridge University Press. Pages 677-715.

This chapter explains how the lessons derived from the analysis of Mexican multinationals, MultiMexicans, in a variety of industries contribute to a better understanding of the strategies used by emerging market firms to upgrade capabilities and internationalize. The chapter explains two main lessons. First, the process of upgrading capability to build an emerging market multinational, and the role played by the characteristics of the home country. The underdevelopment of the country and its institutional weakness influence managers’ skills and mindsets and the industry’s regulation and customer characteristics, thus supporting the funds and technologies available to firms. These, in turn, influence the firm’s capability upgrading and their internationalization speed and breadth. Second, the four alternative upgrading strategies for internationalization that emerging market firms use: Improvement, whereby firms upgrade processes at the local level; Integration, whereby firms upgrade processes at the global level; Inspiration, whereby firms upgrade products at the local level; and Innovation, whereby firms upgrade products at the global level. 

Cuervo-Cazurra, A. and Montoya, M. 2018. Research strategy for analyzing MultiMexicans. In Cuervo-Cazurra, A. and Montoya, M. (Eds). Mexican Multinationals: Building Multinationals in Emerging Markets. New York: Cambridge University Press. Pages 716-729.

The chapter summarizes the methods used in the analysis of Mexican multinationals, or MultiMexicans. The analysis of these firms is based on the comparison of cases studies. The cases studies were selected on the basis of their ability to provide insights for the analysis of MultiMexicans, covering a wider variety of industries, firm sizes, and level of internationalization. The cases were identified among the leading multinationals in their industries, and data was collected from secondary sources and interviews with company managers. Industry experts analyzed two leading firms in twenty two industries, describing the firms’ capability upgrading and internationalization and drawing conclusions from their comparison. 

Cuervo-Cazurra, A. 2016. Emerging market multinationals and theory development: a multi-theoretical approach. In Merchant, H. (Ed.) Handbook of Contemporary Research on Emerging Markets. Northampton, MA: Edward Elgar. Pages 88-116.

I explain how the analysis of emerging country multinationals can be used to help advance theory. I propose that two distinguishing characteristics of emerging economies, their lower level of economic development and their lower level of sophistication of pro-market institutions, can be used to help advance existing theories of the multinational. I discuss how these conditions can be used to modify and undertake a multi-theoretical approach by extending six theories or models that have been used to explain the international expansion of multinational firms: the product life cycle, the incremental internationalization, the eclectic paradigm, internalization theory, neo-institutional theory and the resource-based view. In doing so, I identify some of the assumptions upon which current models and theories are built and extend them by explaining how the study of EMNCs can help identify new arguments. 

Cuervo-Cazurra, A. 2015. The co-evolution of pro-market reforms and emerging market multinationals. In Tihanyi, L., Banalieva, E., Devinney, T. M., and Pedersen, T. (Eds) Advances in International Management 28: Emerging Economies and Multinational Enterprises. Emerald.

I study the relationship between pro-market reforms and the expansion of emerging market multinational companies (EMNCs). Extending institutional economics, I propose a co-evolutionary process, whereby pro-market reforms in emerging markets induce the transformation of domestic firms into EMNCs, and the global expansion of EMNCs, in turn, facilitates the deepening of pro-market reforms in the home country. Specifically, I first explain how pro-market reforms lead to the emergence of EMNCs via international competitiveness, upgrading needs, and escape; I then explain how the global expansion of EMNCs leads to a deepening of pro-market reforms at home via learning, spillovers, and lobbying. I complement these explanations with a discussion of contingencies at the firm (private vs. state, domestic vs. foreign firms), industry (global vs. local industries), and country (developing vs. transition countries) levels. 

Cuervo-Cazurra, A., Meyer, K. and Ramamurti, R. 2015. Internationalization of emerging economy MNCs: The relative resource specialization of firm and environment. In Demirbag, M. and Yaprak, A. ‎(Eds.), Handbook of Emerging Market Multinationals. Edward Elgar.

We study how the country of origin of a firm influences its internationalization, analyzing emerging economy multinational companies (EMNCs) as a laboratory for extending theory. EMNCs have been observed to vary from advanced economy MNCs (AMNCs), suggesting that the home context is the critical explanation. We propose “resource specialization” as the mechanism explaining differences and argue that firms in emerging economies develop a lower degree of resource specialization and wider sets of resources in response to underdevelopment at home. These more varied sets of resources lead EMNCs to have lower levels of internationalization and different patterns of foreign expansion than AMNCs. 

Cuervo-Cazurra, A., and Ramamurti, R. 2014. Introduction. In Cuervo-Cazurra, A., and Ramamurti, R. (eds). Understanding Multinationals from Emerging Markets. Cambridge, UK: Cambridge University Press. Pages 1-11.

We explain the importance of studying emerging market multinationals and their potential contribution to the literature. We also summarize the content of the book, which is organized in three sections on different facets of EMNCs. The first section consists of chapters that take a historical view of EMNCs or argue for more research that extracts the lessons of history. The second section analyzes the mechanisms that facilitate or hinder EMNCs from upgrading their capabilities to international levels to compete in global markets. In the third part, we abstract from these themes and explain how the economic and institutional under-development that characterizes developing countries lead to distinctive internationalization behavior by EMNCs. 

Cuervo-Cazurra, A., and Ramamurti, R. 2014. Conclusion: An agenda for future research. In Cuervo-Cazurra, A., and Ramamurti, R. (eds). Understanding Multinationals from Emerging Markets. Cambridge, UK: Cambridge University Press. Pages 271-300.

We provide an overview of the contributions of the papers in the book and add our own analysis of what is theoretically new or interesting about EMNCs, compared to MNCs from the advanced economies. In addition, we propose an agenda for future research on EMNCs that reflects the collective wisdom of our contributors. Specifically, we discuss how the underdevelopment of the economy and institution that characterize emerging markets have a positive and negative effect on firms that induce their internationalization following eight drivers: trickle-up innovation, self-reliant innovation, improvisation management self-reliant management, technological escape, marketing escape, institutional escape and discriminatory escape. 

Cuervo-Cazurra, A. 2013. How developing country multinational companies upgrade capabilities using value chain configuration in advanced economies. In Williamson, P., Ramamurti, R., Fleury, A., and Fleury, M. T. (Eds.), The Competitive Advantage of Emerging Country Multinationals. Cambridge, UK: Cambridge University Press. Pages 174-179.

In this commentary I analyze global value-chain configuration by EMNEs, specifically describing four strategies that these firms can use in advanced economies to upgrade their capabilities and solve their developing-country comparative disadvantages: Low-cost and reliable finance, technology, customer intelligence and innovation, brands and marketing. I then illustrate the four strategies using the four country studies in this part of the book. 

Cuervo-Cazurra, A., and Genc, M. 2012. Categories of distance and international business research. In Wood, G., and Demirbag, M. (Eds.), Handbook of Institutional Approaches to International Business. Northampton, MA: Edward Elgar. Pages 219-235.

In this chapter we provide depth to the concept of distance and its impact on international business by separating dimensions of the environment and their associated distances into three  types: 1) those along which countries cannot be ranked by development, but are merely different from one another, obligating firms to develop non-market resources to operate in a different country (obligating dimensions), 2) those along which countries can be ranked by the extent to which they provide non-market resources that support firms’ operations (supporting dimensions), and 3) those along which countries can be ranked by the extent to which they pressure the firm to continuously improve its non-market resources and capabilities (pressuring dimensions). This classification challenges the assumptions that distance is symmetric and always has a negative impact on the multinational company. 

Cuervo-Cazurra, A., and Un, C. A. 2011. Economic integration and the technological capabilities of local firms. In Jovanovic, M. (Ed.), International Handbook of Economic Integration. Northampton, MA: Edward Elgar. Volume II, pages 77-89.

This chapter analyzes the influence of economic integration agreements on the technological capabilities of domestic firms. The review of the literature reveals that most research has focused on how increased competition that accompanies economic integration induces firms to upgrade their technological capabilities. However, economic integration also helps firms upgrade their technological capabilities through the opening of markets, easier access to foreign inputs and intermediate products, and increased public support for R&D. These limitations in existing research result in the identification of two main areas for future research. One is the analysis of the concept of economic integration in more detail, studying how the characteristics of different types of economic integration and the characteristics of countries in the agreement affect the relationship between economic integration and a domestic firm’s technological capabilities. Another is the analysis of the concept of technological capabilities in more depth, studying how different types of firms and alternative mechanisms for technological upgrading react differently to the influence of economic integration on a domestic firm’s technological capabilities. 

Cuervo-Cazurra, A. 2011. Internationalization process. In Kellermanns, F., and Mazzola, P. (Eds.), Handbook of Research on Strategy Process. Northampton, MA: Edward Elgar. Pages 432-451.

This chapter reviews the state of knowledge on a firm’s internationalization process, the sequence of events that a firm follows as it expands outside its country of origin. First I review traditional models and organize them around the questions they answer: How to internationalize, how to enter a country, and how to select among countries in which to expand. I then discuss challenges to these models that have emerged in recent times – the rapid internationalization of small high-tech firms and learning through networks – and indicate how these challenges can be integrated with previous arguments. I continue the review by discussing how new phenomena, offshoring and global supply chains and developing-country multinationals, require new explanations. I conclude with a reflection on research areas that need attention: the transformation from a small and simple to large and complex multinational firm, the reduction of internationalization, and the relationship between internationalization process and performance. 

Un, A., and Cuervo-Cazurra, A. 2009. Interactions with customers for innovation. In Costanzo, L. A., and MacKay, R. B. (Eds.), Handbook of Research on Foresight and Strategy. Northampton, MA: Edward Elgar. Pages 362-379.

This chapter analyzes the ways in which firms can use their interactions with customers to generate innovations and better foresight future trends in the marketplace. We discuss how the interaction with customers varies depending on the type of innovation the firm is aiming to achieve: Product improvement, product versioning, new product development, and new product discovery. Each of them has distinct knowledge creation challenges in terms of the identification, transfer, and integration of customer knowledge to create innovations that fulfill their needs and preferences. 

Cuervo-Cazurra, A., and Un, A. 2007. Types of difficulties in internationalization and their consequences. In Tallman, S. (Ed.), A New Generation in International Strategic Management. Northampton, MA: Edward Elgar. Pages 63-83.

We extend the literature on the difficulties of internationalization by discussing their types and specific consequences associated with each type. The types of difficulties can be separated into three main groups based on their cause and specificity: the inabilities to transfer advantage and to create value, the disadvantages of transfer and of foreignness, and the liabilities of expansion, newness, foreignness, and infrastructure. We discuss how each type has specific consequences associated with it, and suggest strategies for identifying them. 

Un, A., and Cuervo-Cazurra, A. 2005. Top managers and the product improvement process. Advances in Strategic Management, 22: 319-348.

We analyze the role of top managers in the process of improving existing products in large established firms. The results of an inductive study reveal two key arguments. First, we find that the process is an “involved” top-down approach, rather than middle-up-down or bottom-up, discussed in previous studies on new product creation. Top managers actively participate throughout the process, taking on four roles: evaluation of product market performance, selection of products for improvement, initiation of the innovation process through delegation to middle managers of the responsibility to organize bottom-level employees to take actions toward product improvement, and monitoring of progress to ensure improvement (ESIM). Top managers become involved as necessary to reduce the resistance of people at the middle and lower levels to change in current routines. Second, we find that in companies that achieve superior product improvement, managers have a well-developed professional absorptive capacity and have routinized frequent interactions to evaluate, select, initiate, and monitor. Other characteristics of managers, such as personal absorptive capacity, incentive system, or mandate from above, are common across both high and low performers.

Cuervo-Cazurra, A., and Un, C. A. 2004. Firm-specific and non-firm-specific sources of advantages in international competition. In Ariño, A., Ghemawat, P., and Ricart, J. (Eds.), Creating Value through International Strategy. New York: Palgrave MacMillan. Pages 78-94.

We build on the resource-based theory (RBT) and the international management literature to analyze the sources of a firm’s advantage in international competition. We propose that the firm can potentially benefit not only from firm-specific sources of advantage –parent, subsidiary, and multinational– but also, contrary to existing RBT arguments, from non-firm-specific ones –home, host, and foreignness. We analyze the conditions under which these provide an advantage to the firm and the location of such advantage. We conclude with a discussion of the use of diverse sources of advantage against different types of competitors. 

Cuervo-Cazurra, A., and Ramos, M. 2005. Explaining the process of internationalization by building bridges among existing models. In Floyd, S. W., Roos, J., Jacobs, C., and Kellermanns, F. (Eds.), Innovating Strategy Processes. London: Blackwell. Pages 111-122.

We analyze the internationalization process, clarifying and integrating existing research into a more complete and realistic model. We argue that the theories of organizational change that underlie internationalization process models must be made explicit in order to clarify the models’ boundaries. Furthermore, we integrate valid insights into a comprehensive model with an underlying teleological theory of organizational change, providing a more realistic explanation of the internationalization process. 

Cuervo-Cazurra, A., and Un, C. A. 2004. The bald eagle cannot find its way in the rainforest: Sources and solutions to the difficulties in the internationalization of developed country MNEs into developing countries. In Prasad, S. B., and Gauri, P. N. (Eds.), Global Firms and Emerging Markets in the Age of Anxiety. Westport, CT: Praeger. Pages 13-36.

We analyze the sources of and potential solutions to the difficulties that developed country multinational enterprises (DCMNEs) face when they internationalize into less developed countries (LDCs). Despite being highly competitive and having large resource pools, DCMNEs still encounter difficulties when they enter LDCs. We apply the resource-based theory and the related knowledge-based view of the firm to develop the internationalization literature and explain that such difficulties arise from their lack of advantageous resources, the presence of disadvantageous resources, and their lack of neutral complementary resources, which create related but separable difficulties. We discuss the characteristics of firms and the different types of difficulties they face and analyze how such challenges might be solved through the management and development of resources, particularly knowledge. 

Cuervo-Cazurra, A. 2002. Transforming the firm through the co-evolution of resources and scope. In Chakravarthy, B., Mueller-Stewens, G., Lorange, P., and Lechner, C. (Eds.), Strategy Process: Shaping the Contours of the Field. London: Blackwell. Pages 18-45.

I study the transformation processes used by firms in their quest to develop a competitive advantage in the experimental setting of firms facing radical changes in the institutional environment. The inductive analysis reveals that firms use the co-evolution of resources and scope, the interactive transformation of resources and activities, to manage their transformation in a changing environment, enabling them to upgrade their resources and alter their activities interactively. Additionally, I provide specific motives and processes that drive the relationships among dimensions of resources and activities and link them to the development of the competitive advantage. 

Book chapters on global sustainable governance

Park, J., Cuervo-Cazurra, A., and Montiel, I. 2023. The evolution of sustainability concerns over business activities: from local to cross-national to global. In Goerzen, A. (ed.) Research Handbook on International Corporate Social Responsibility. Edward Elgar Publishing. (forthcoming).

Although sustainability has recently become a crucial topic of discussion among business practitioners and scholars, a much longer history of sustainability addressing how companies operate is little known. In this paper, we analyze the historical evolution of attitudes toward sustainability concerns over business activities, i.e., societal worries about the negative externalities of business activities on social and environmental issues. We propose that sustainability concerns in business have a deep historical foundation that can be traced back to the 18th century. Over time, these concerns have expanded in the scale at which they operate, moving from the local (1700s-1960s) to the cross-national (1970s-1990s) to the global (2000s-2020s). We illustrate this evolution by showcasing the development of two sustainability concerns in business activities: poor working conditions and industrial pollution.

Wright, M., Wood, G., Cuervo-Cazurra, A., Sun, P., Okhmatovskiy, I., Grosman, A. 2022. State capitalism and the firm. In Wright, M., Wood, G., Cuervo-Cazurra, A., Sun, P., Okhmatovskiy, I., Grosman, A. Oxford Handbook on State Capitalism and the Firm. Oxford: Oxford University Press. Pages 3-24.

In this introduction to The Handbook of State Capitalism and the Firm, we provide an overview of state capitalism, its evolution, diversity, and theoretical implications. We clarify the tension between the market and the government that drives state intervention in the economy. A brief historical evolution of state capitalism provides a much-needed background to explicit and implicit discussions of the diversity of dimensions of state capitalism. We document how state capitalism seems to have followed a pendulum between periods of high dominance and periods of retrenchment that have resulted in the transformation of the literature over time. We also explain the variety of state capitalism that has been implemented across countries and time. We then outline the diversity in the theorization of state capitalism as a phenomenon and the implications of the cross-border expansion of state capitalism. We conclude with an overview of the potential avenues for future research on state capitalism and the firm.

Cuervo-Cazurra, A., & Li, C. 2022. Variations in the internationalization of state-owned firms. In Wright, M., Wood, G., Cuervo-Cazurra, A., Sun, P., Okhmatovskiy, I., Grosman, A. Oxford Handbook on State Capitalism and the Firm. Oxford: Oxford University Press. Pages 285-305.

We analyze the impact of state ownership on firm internationalization. We propose and explain four drivers of the variation in the internationalization of state-owned enterprises (SOEs) from the same country: (1) Industry, in which SOEs created to provide public services are less likely to internationalize, while those created to facilitate industrial upgrading are more likely to expand abroad; (2) type of state ownership, in which SOEs owned by lower-level governments like municipalities are less likely to internationalize, while those owned by higher-level governments such as the central administration are more likely to go abroad; (3) level of state ownership, in which SOEs with higher state ownership are less likely to expand overseas, while those with lower state ownership are more likely to internationalize; and (4) managerial independence, in which SOEs with lower managerial independence are less likely to internationalize, while those with higher independence are more likely to expand abroad.

Colpan, A., and Cuervo-Cazurra, A. 2019. Business groups in international business. In Lopes T., Lubinski, C. and, Tworek, H. (Eds) Companion to the Makers of Global Business. Routledge.

We analyze the evolution of business groups as an organizational form and how this form has played a role in the globalization of markets. Business groups, a collection of legally-independent firms operating in unrelated product markets and connected to each other via equity and other ties, exist in many countries and currently play a major role in emerging ones. In emerging economies, business groups have been the dominant forms of large enterprises and have led the internationalization processes of their economies. The internationalization of the Koç group, the largest Turkish business group, illustrates how membership in a business group provides affiliated companies with both advantages and disadvantages in their internationalization, and how the adoption of pro-market reforms has profound effects on the global expansion of business groups. 

Colpan, A. and Cuervo-Cazurra, A. 2019. Business groups as an organizational model. In Oxford Research Encyclopedia of Business and Management. Oxford: Oxford University Press.

Business groups are an organizational model in which collections of legally independent firms bounded together with formal and informal ties use collaborative arrangements to enhance their collective welfare. Among the different varieties of business groups, diversified business groups that exhibit unrelated product diversification under central control, and often containing chains of publicly listed firms, are the most-studied type in the management literature. The reason is that they challenge two traditionally held assumptions. First, broad and especially unrelated diversification have a negative impact on performance, and thus business groups should focus on a narrow scope of related businesses. Second, such diversification is only sustainable in emerging economies in which market and institutional underdevelopment are more common and where business groups can provide a solution to such imperfections. However, a historical perspective indicates that diversified business groups are a long-lived organizational model and are present in emerging and advanced economies, illustrating how business groups adapt to different market and institutional settings. This evolutionary approach also highlights the importance of going beyond diversification when studying business groups and redirecting studies toward the evolution of the group structure, their internal administrative mechanisms, and other strategic actions beyond diversification such as internationalization.

Cuervo-Cazurra, A. 2018. Business groups in Spain: regulation and ideology drivers for transformation. In Colpan, A. M. and Hikino, T. (Eds) Business Groups in the West: The Evolutionary Dynamics of Big Business. Oxford: Oxford University Press.

This chapter studies the drivers of the transformation of business groups in Spain and complements the traditional drivers (weak institutions and a closed economy) with new ones (industry regulation and owner ideology). These drivers vary with the ownership of business groups. First, state-owned business groups emerge following an ideology of national economic development, reduce scope with pro-market reforms, and continue to exist in line with the ideology of social stability and strategic development. Second, bank-owned business groups emerge as a result of industry regulation, and decline with deregulation after pro-market reforms. Third, family-owned business groups emerge to benefit from opportunities in a closed economy with weak institutions, and refocus in response to competition after pro-market reforms. Finally, labor-owned business groups emerge as a result of an ideology of social development, and continue after pro-market reforms in line with this ideology.

Cuervo-Cazurra, A. 2014. Transparency and corruption. In Forssbæck, J. and Oxelheim, L. (Eds.), The Oxford Handbook of Economic and Institutional Transparency. New York: Oxford University Press.

In this chapter I analyze how transparency can deter corruption. I first review the concept of corruption, its types, and the reasons why it exists. I then consider corrupt relationships as multiagency relationships before explaining how transparency can help tackle corruption by solving the information asymmetries in the agency relationships. I argue that increasing transparency, although necessary, is not sufficient to reduce corruption, and I suggest that transparency must be complemented by monitoring and punishment to be effective at reducing corruption. 

Cuervo-Cazurra, A. 2014. Corruption. In Cooper, C. (Ed.), Wiley Encyclopedia of Management. 3rd edition. Marblehead, MA: John Wiley & Sons.

This article analyzes corruption in government. Corruption is the abuse of public power for private gain. There are not only negative but also positive views on corruption. However, most research tends to propose and find that corruption has a negative impact on economic transactions, even though its illegal nature makes it difficult to measure and analyze. Solutions to corruption can address the demand of bribes by government official or the supply of bribes by companies and individuals. To reduce the demand of bribes, the government can reduce the opportunity for corruption via controls and transparency, and increase the cost of engaging in corruption by government officials via laws. To reduce the supply of bribes, companies can limit the ability of employees to supply a bribe via codes of conduct and controls, and the government can increase the cost to employees and companies who supply a bribe via laws punishing the supply of bribes at home and abroad.

Aguilera, R., Cuervo-Cazurra, A., and Kim, S. 2009. Taking stock of research on codes of good governance. In López Iturriaga, F. J. (Ed.), Codes of Good Governance Around the World. Hauppauge, NY: Nova Science Publishers. Pages 3-32.

This chapter reviews the literature of codes of good corporate governance, the set of best practice recommendations regarding the behavior and structure of board of directors of a firm. The review shows that a lot of research progress has been made in recent years, but there are still large gaps in knowledge. That is, although there is a good understanding of the diffusion of codes of good governance around the globe and of the different determinants of this diffusion, there is need for more research on the specific contents of the codes, and of whether codes of good governance are an appropriate tool to improve corporate governance practices.

Cuervo-Cazurra, A, and Aguilera, R. 2004. The worldwide diffusion of codes of good governance. In Grandori, A. (Ed.), Corporate Governance and Firm Organization. Oxford: Oxford University Press. Pages 318-348.

This chapter goes beyond the convergence/divergence dilemma by analysing change in corporate governance practice in terms of the adoption of some codes of good governance rather than as the adoption of one particular model. It considers the speed of adoption of a code as a process of knowledge transfer across countries, driven by a mixture of effectiveness and legitimization reasons. The empirical study considers fifteen common-law countries and twenty civil-law countries, and finds that the development of a first code of corporate governance was faster in countries with greater exposure to foreign investment (but not to foreign trade) and with a common law system.

Teaching case studies on global strategic management

 Cuervo-Cazurra, A. and Montoya, M.A. 2014. Building Chinese Cars in Mexico: The Grupo Salinas-FAW Alliance. Innovar, 24 (54), 219-230. 

Ricardo Salinas Pliego was the CEO of Grupo Salinas, one of the largest business groups in Mexico, and in 2009 he faced a challenge. Two years earlier, he had negotiated with the Chinese car company FAW to import Chinese cars into Mexico as an initial step towards their manufacturing. However, the global crisis of 2008 made him question the viability of the project and he had to decide whether to close the operation or continue in the hope of a quick recovery. This was a difficult decision because the group had sold several thousand cars and established a network of car dealers. Closing the operation would mean not only losing the investment in the network while having to continue servicing the cars, but would also result in a blow to the reputation of the group. He was pondering what the best option would be. 

Cuervo-Cazurra, A., and Alvim, F. 2013. Achieving global leadership in the plug-in commercial refrigeration industry. Northeastern University, D’Amore-McKim School of Business and Fundação Dom Cabral (Case and teaching note). Ivey Publishing 9B13M012

The chief executive officer and chair of the board of directors of a company that designs, builds and sells consumer and commercial refrigeration products are trying to decide if the firm should expand in Asia and, if so, which method it should use. In recent years, Metalfrio has become a global leader in its industry by establishing manufacturing operations in Mexico, Turkey and Russia, as well as expanding within its home territory of Brazil, with sales in over 80 countries. Asia is offering promising opportunities for growth, and key customers are suggesting the company establish manufacturing operations there to better serve its global needs. The case addresses how Metalfrio transfers its competitive advantages across its international operations, and it further discusses how the company coordinates its operations to serve countries in which it does not have a production facility via exports. The case analyzes the competitive advantage of the firm and its transferability to other countries. 

Cuervo-Cazurra, A., and Alvim, F. 2013. A note on the commercial refrigeration industry. Northeastern University, D’Amore-McKim School of Business and Fundação Dom Cabral (Case and teaching note). Ivey Publishing 9B13M024

This supplement to Metalfrio: Achieving Global Leadership in the Plug-in Commercial Refrigeration Industry 9B13M012 gives an overview of the commercial refrigeration sector, including a history of the industry, major participants and markets, and key local and regional competitors. The note also provides select financial and market data for the years 2002 to 2009. 

Teaching cases on global sustainable governance

Mthombeni, M., Wöcke, A., and Cuervo-Cazurra, A. 2020. McKinsey & Company: Facilitating Bribery in South Africa. Gordon Institute of Business Science, University of Pretoria. (Case and teaching note). Ivey Publishing 9B20M145.

The head of the South African subsidiary of the US consulting firm McKinsey & Company (McKinsey), has to address the implications of the firm’s involvement in a corruption scandal. The South African office was implicated in a scandal involving its local partner, Trillian Capital Partners (PTY) Ltd. (Trillian), and Eskom, a South African state-owned enterprise (SOE). McKinsey was required to partner with a local company as a condition of any contract with a South African SOE. McKinsey took on Trillian as its local partner after Trillian was recommended by a former client. Trillian was, however, associated with the Guptas, a family that the South African Public Protector (an ombudsman) had accused of using its influence with the South African president, Jacob Zuma, and his family for corrupt activities. The partnership (first with a company named Regiments Capital (PTY) Ltd. [Regiments] and then, following restructuring, with Trillian) directly benefited the Gupta family. More than three years into the relationship, McKinsey claimed to have discovered that its partner was politically exposed and under investigation by the South African authorities. McKinsey’s new global managing partner attempted to limit the damage to the company’s reputation by issuing an apology. However, the South African public appeared skeptical about the apology, and questions remained regarding McKinsey’s integrity. The questions left unanswered included the following: Was Sneader’s apology enough to enable McKinsey to quell the attack on its reputation? Should McKinsey do more to enhance its standing within the South African business community, or should it accept that its reputation had suffered irreparable harm?

Cuervo-Cazurra, A., Train, M., and McNett, J. 2011. Ransom on the high seas: The case of piracy in Somalia. Northeastern University, College of Business Administration. (Case and teaching note). Ivey Publishing 9B11M104

In recent years, incidents of piracy have increased dramatically off the coast of the failed state of Somalia. In this case, a group of 14 pirates have hijacked a cargo ship full of machinery, but have yet to make any demands. They hold hostage a multinational crew of 20 (whose captain and two officers are American), the ship, and the cargo. The chief operating officer of an international shipping company must choose among alternative strategies to get the crew, cargo, and ship back safely with as little cost as possible. 

Dau, L. A., and Cuervo-Cazurra, A. 2010. Cemex: Building Global Sustainability Advantage. In Costanzo, L. A. (Ed.), Cases in Strategic Management. Columbus, OH: McGraw-Hill.

This case study focuses on the global sustainability practices implemented by the Mexican cement producer CEMEX. In three decades the company has grown rapidly through aggressive expansion efforts and acquisitions, while reducing costs and improving efficiency, to become one of the largest cement firms in the world. However, in the same period individuals and governments have increased their demands that companies minimize their environmental impact if they are to operate in their countries. As such, CEMEX has strived to not only improve its sustainability practices, but also to become a global leader by transferring best practices across countries. However, such a transfer is challenging. Unlike the skills needed to operate cement plants, which are fairly standard across countries, the skills to achieve a sustainable operation require adaptation to local needs and demands.

 January 2023