PRO-MARKET REFORMS AND DEVELOPING COUNTRY MULTINATIONAL CORPORATIONS

Building on the institution-based view of strategy, I study the impact of pro-market reforms on developing country firm multinationality. I propose that reforms increase multinationality by reducing institutional imperfections and increasing domestic competition, thus inducing firms to expand internationally. However, I argue the effect is higher for private firms than state firms because the former are compelled to be more responsive to institutional changes and opportunities in order to survive. Three-level RCM Poisson analyses of a panel of the largest firms in Latin America for the period 1989 to 2009 provide robust support for the arguments. Copyright (C) 2012 Strategic Management Society.