How Institutions Matter for Emerging Market MNEs Expanding in Latin America and the Caribbean

Research on the effect of institutions on entry mode choice has often obtained mixed empirical results, which can be attributed to the use of a single reference point when conceptualizing and operationalizing institutional factors. Moreover, current research on entry mode makes only incremental methodological contributions by using finer-grained measures or different samples. We address these research issues by conducting a distinctive approach on entry mode research. Adopting the configurational approach, we bundle different country-, industry-, and firm-level factors to identify how their combinations influence the choice between an acquisition and a greenfield investment. We test our framework in a sample of 316 Brazilian foreign subsidiaries operating in 16 Latin American and Caribbean countries from 2000 to 2015. Results show that emerging market multinationals have different firm-specific advantages to mitigate external uncertainty stemming from technological intensity and institutional distance when operating in Latin American and the Caribbean countries. These findings contribute to our understanding of how host country institutions matter for emerging market multinationals entering in markets located in a specific geographic region.