Presented at Workshop Internacional Universidad … M. Rivas, PhD Associate Professor CanisiusUniversity Buffalo, NY 14208 [email protected] Presented at Workshop Internacional Universidad

Ronald M. Rivas, PhD

Associate Professor

Canisius University

Buffalo, NY 14208

[email protected]

Presented at Workshop InternacionalUniversidad del Pacífico, Lima, Perú

June 21st, 2013

Motivation� Rise of MNCs from Latin America

� South-South FDI represents one third of all FDI going to developing countries.

� Companies from Argentina, Mexico and Brazil that were dominant multilatinas in the 1990s, were joined by emerging multilatinas from Chile, Colombia, Venezuela and Peru in the last two decades

Multinationalization�Multinationalization is the process of

international expansion other than exports, such as franchising, JV or foreign direct investment (FDI)

�Multinationalization of Developed countries MNCs is explained by the incremental internationalization model and the eclectic paradigm

Global Latinas vs other MNCs

�How different is the multinationalization

process of companies from emerging economies (Peru) and what strategies are used more prevalently by such multinationals?

Restaurant Name Type of Cuisine Restaurants in Perúnumber

Restaurants abroad

number (d)

Net Sales (c)US$ mn

Employees number

Foreign Countries with FDI

Astrid y Gastón Fusion 1 7 1.5 42 7Osaka Fusion 1 2 n.a. n.a. 1El Otro Sitio Peruvian food 1 5 n.a. n.a. 1Tanta Peruvian food 4 2 1.8 70 2Brujas de Cachiche Peruvian food 1 4 1.4 52 1Alfresco Peruvian seafood 1 2 n.a. n.a. 1La Mar Peruvian Seafood 1 7 n.a. n.a. 5Segundo Muelle Peruvian Seafood 3 4 n.a. n.a. 3Pardos Chicken Roasted Chicken 14 4 1.7 13 3Las Canastas Roasted Chicken 6 1 n.a. n.a. 1Roky’s Roasted Chicken 51 2 1.7 55 2La Caravana Roasted Chicken 5 1 2.5 220 1Bembos Peruvian Burgers 40 3 17.4 745 2China Wok Peruvian-Chinese 22 36 3.5 320 6

La Gran FrutaJuices and sandwiches

4 1 n.a. n.a. 1

Norky's Roasted Chicken 42 1 n.a. n.a. 1Pizza Hut & Burger King

Fast food (US MNC)

14 11,925 a 23.4 2,355 n.a.

McDonald’s Fast Food(US MNC)

10 32,478 6.0 600 n.a.

KFC Fast Food (US MNC)

46 37,080 b 30.7 2,000 n.a.

Domestic Business Model

Source: Cuervo Cazurra (2008) Journal of International Management

Time to start multinationalization: Global Latinas


1st Century of Globalization:1820 – 1913UK WINNER

Time to StartMultinationalizationAVERAGE= 90 YRS



Inter-War Period:Global Isolationism1914 - 1945





2nd Century of Globalization :1950 – nowUSA WINNER

Inter-War Period:Global Isolationism1914 - 1945





Time to start multinationalization: Peruvian

Multinational restaurants

Source: Rivas & Mayorga (2011) Revista Innovar

Pro-market reforms1990 - now












Source: Cuervo Cazurra (2008) Figure: Location of Multinationalization

Location to start multinationalization: Global Latinas

1st FDI TO Similar Markets in Culture & Economy

1st FDI toDifferent Markets in Culture & Economy

Location to start multinationalization: Global Latinas

Location to start multinationalization: Peruvian


Source: Rivas & Mayorga (2011)

1st FDI TO Similar Markets in Culture & Economy

1st FDI toDifferent Markets in Culture & Economy

Location to start multinationalization: Peruvian


Franchises by domestic business model


Franchises by destination: Premium Niche


Franchises by destination: Low Cost Leaders


Legitimacy strategy and Multinationalization

• Gastronomy- --the traditions and practices of eating socially valued food--- forms part of the intangible cultural heritage of a nation.

• Four entries (out of 298) of the UNESCO 2012 Intangible Cultural Heritage List relate to gastronomy:• The Gastronomic Meal of the French;• Traditional Mexican Cuisine -ancestral, ongoing

community culture, the Michoacán paradigm; • The Mediterranean Diet; and • Gingerbread Craft from Northern Croatia, all

inscribed in 2010 (UNESCO, 2012).

Franchises by Destination: Start in Peru.

Strategy of Heritage reinterpretation

Southern Region of

Latin America

89%

Northern Region of

Latin America

3%

Central America & Caribbean

6%

Number of restaurants

in North America

1%

Europe-Latin

1% Asia0%

Source: Rivas & Mayorga working paper

Franchises by Destination: Start in USA.

Strategy of Heritage Preservation

Africa; 0,2%Asia; 5,7%

Australia; 0,3%

Central America & Caribben;

4,5%

Europe-Latin; 19,5%

Europe-North; 2,7%

Europa-Other; 0,5%

North America;

45,6%

Northern Region of

South America; 5,3%

Southern Region of

South America;

15,8%


Geographic Diversification: Start in Peru.

Strategy of Heritage reinterpretation

5REGION0%

4REGION5%

3REGION6%

2REGION17%

1REGION72%


Geographic Diversification: Start in USA.

Strategy of Heritage preservation

5REGION0%

4REGION0%

3REGION1%

2REGION3%

1REGION96%


Conclusions� Peruvian restaurant multilatinas have a substantial

delay between the year funded and the first Foreign restaurant.

� However, multinationalization increased exponentially after the implementation of pro-market reforms in the 1990s.

� We found that they expand both to countries with proximate as well as to countries with distant psychic distance.

� These findings are at odds with the gradual internationalization model.

ConclusionsInstitutional change:

� Increased Market Integration.

� Reduced transaction costs for domestic firms, which benefited domestic firms over multinationals competing in the host country.

�Reinterpretation of Gastronomic Cultural Heritage.

�Type of Business model and Legitimacy strategy affects FDI diversification.

Presented at Workshop Internacional Universidad … M. Rivas, PhD Associate Professor CanisiusUniversity Buffalo, NY 14208 [email protected] Presented at Workshop Internacional Universidad

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