Luis Alfonso Dau

Structural Reform and Firm Profitability in Developing Countries

We extend agency theory to propose that structural reform positively impacts firm profitability in developing countries because the improvements in external monitoring that accompany structural reform decrease the agency costs faced by firms. However, we also argue that not all firms benefit equally from structural reform because their agency problems are impacted differently. Hence, we propose that structural reform results in higher improvements in profitability for domestic state-owned and domestic private firms than it does for subsidiaries of foreign firms. Results of the analyses of the largest 500 firms in Latin America support the arguments, suggesting that, contrary to the views of many critics of globalization, domestic firms are the main beneficiaries of structural reform in developing countries.

The Great Recession and Emerging Market Firms: Unpacking the Divide between Global and National Level Sustainability Expectations

Abstract Purpose The purpose of this chapter is to examine how multinational firms have an added incentive to promote corporate social responsibility (CSR) in order to maximize profitability and adapt to the changing normative climate in a post Great Recession economy. Methodology/approach This chapter builds on institutional theory using contextual evidence from Mexican firms to provide insight into the varying pressures facing local and multinational enterprises in emerging markets. Findings This chapter highlights different sets of pressures faced by emerging market firms, both domestic and multinational. This chapter contends that emerging market multinational enterprises (EMNEs) are incentivized to uphold CSR practices to a greater degree than domestic firms from emerging markets. Research limitations Contextual evidence for this chapter was confined to Mexican firms, which provides an opportunity for future research to be carried out from alternative emerging markets. Social and practical implications From a social standpoint, this chapter sheds light on the challenges of globalization and the current rift between national level policies, coinciding behavior, and global expectations. From a practical standpoint, this chapter could inform and alert CEOs and practitioners to the nuances of CSR expectations, contingent upon the sphere in which they choose to operate in. Originality/value This chapter contributes to the growing dialogue on EMNEs while highlighting the schism between national and global expectations for CSR. Further, this chapter adds to the literature on institutional theory by connecting it to the in-group and out-group literature from sociology.

Global Security Risks, Emerging Markets and Firm Responses: Assessing the Impact of Terrorism

The purpose of this chapter is to elucidate the various resiliency toolkits that emerging market multinational enterprises (EMNEs ) possess. As terrorism threats continue to proliferate globally, it is critical that scholars and practitioners identify ways to bolster resilience and enhance organisational performance. It is essential to foster a dialogue between the IB and resilience communities, because businesses are a primary target of terrorism. Perhaps surprisingly, there is scant empirical or theoretical work on firm responses to terrorism. This chapter offers a meaningful contribution by highlighting the strategies that EMNEs use to augment resilience to terrorism. We discuss firm responses to terrorism in the context of Mexican multinationals and in doing so, we provide insight into how EMNEs from dangerous locations manage to survive and perform.

Complacency and Automation Bias in the Enbridge Pipeline Disaster

Automation bias was likely the main contributing factor in the Enbridge pipeline disaster that occurred on July 26, 2010, when large amounts of crude oil were released into the Kalamazoo River and Talmadge Creek. An examination of the Enbridge oil pipeline accident suggests that complacency and automation bias played leading roles but were overlooked by regulators. Moreover, we believe that because the National Transportation Safety Board overlooked existing research on automation bias, its recommendations are flawed and could exacerbate, rather than alleviate, the problem. Industry, policy makers, and regulators need to consider automation bias when developing systems to reduce the likelihood of complacency errors.

Overcoming the Home Field Disadvantage: How BRICS Firms Adapt to Market Reforms

Abstract Purpose The goal of this chapter is to discuss the managerial implications of regulatory reforms in BRICS countries and how those reforms affect the strategy and performance of BRICS multinationals. In particular, we consider (1) how firms may learn from the institutional and competitive changes at home that accompany pro-market reforms and use this knowledge to venture out successfully across borders, (2) how firms may learn through their international operations as a means to enhance their competitiveness and responsiveness to reforms in their home market, and (3) how BRICS multinationals differ from other emerging market multinationals. Methodology The chapter is primarily conceptual and relies heavily on case studies, interviews, and public financial data. Findings Ultimately, reforms are implemented by the state, but the strategic responses of managers to these reforms are largely what determine whether their firms will survive and thrive under the new and evolving regulatory conditions. BRICS firms are particularly well positioned to take advantage of reforms within their own countries and in other emerging markets, including other BRICS nations. Originality/value The chapter underscores the importance of aligning strategy with home and host market policies and environments. Research Limitations The observations presented are conceptual and have not been verified quantitatively. We rely heavily on historical observation and, therefore, much of the analysis is selective to those firms and may not apply to other firms.