Open Conference Systems, 16th SGBED & XII ESPM International Conference in Management

Font Size: 
HOW INSTITUTIONS AFFECT FOREIGN ENTRY MODE: THE CASE OF BRAZILIAN AIRPORTS
Walter Caballero, Frederico Araujo Turolla, Mario Henrique Ogasavara, Nidi Andrea da Cruz

Last modified: 2019-03-27

Abstract


This paper examines the institutional theory aspects for entry mode of infrastructure’s foreign direct investment (FDI) in the recent Brazil’s airport privatization process in light of the local institutional (contractual) environment to attract resources and knowledge to overcome country’s infrastructure asymmetries. The paper draws on institutions theory. We consider the institutional environment in Brazil for foreigner investors pursuant to key regulations on concessions and on bidding and procurement of public-private partnerships (PPP). In addition, the influence of the major local contractors on the bidding process in infrastructure.  project auctions. This paper will be based upon qualitative research with a case study focusing on the entry of three international airport infrastructure airports that were winning bidders in the recent privatization process in Brazil. Analysis of documents was carried out. Results show that without any prior knowledge of local institution environment these firms have committed high volumes of capital into Brazil counting on the protection of the country’s institution environment of concessions and that a wide anticorruption operation in Brazil has promoted a major change in the entry mode of foreign firms in this market.


Keywords


Entry Mode - Institutions - FDI - Infrastructure - Airport

References


ALVARENGA, D. (2012) Governo arrecada R$ 24,5 bilhões com leilão de aeroportos

(Government raises BRL 24.5 billion with airport bids). G1 Economy. News available in http://g1.globo.com/economia/negocios/noticia/2012/02/governo-arrecada-r-245-bilhoes-com-leilao-de-aeroportos.html, accessed in June 2017

ALVARENGA, D. and GASPARIN G. (2013) Governo arrecada R$ 20,8 bilhões com leilão de Cofins e Galeão (Government raises BRL 20.8 billion with Confins and Galeão bids). G1 Economy. News available in http://g1.globo.com/economia/negocios/noticia/2013/11/governo-arrecada-r-208-bilhoes-com-leilao-de-confins-e-do-galeao.html, accessed in June 2017

ALVARENGA, D. and MELO, L. (2017)   Governo arrecada R$ 3.72 bilhões com leilão de aeroportos e grupos estrangeiros assumem concessão (Government raises BRL 3.72 billion with airport bids and foreigner groups take on concessions) G1 Economy. News available in http://g1.globo.com/economia/negocios/noticia/governo-arrecada-r-372-bilhoes-com-leilao-de-aeroportos.html, accessed in June 2017

ANAC (2017) Contratos com Partes Relacionadas (Related Party Agreements), Available in http://www2.anac.gov.br/Concessoes/concessoes_vigentes/gru/outros_documentos/Contratos_com_Partes_Relacionadas.pdf, accessed in May 2017

ANAC (2016) ANAC aprova edital dos aeroportos e leilão será realizado no dia 16 de março de 2017 (ANAC approves airport edict  and bid  will be held on March 16, 2017) available in http://www.aviacao.gov.br/noticias/2016/11/anac-aprova-edital-dos-aeroportos-e-leilao-sera-realizado-no-dia-16-de-marco-de-2017, accessed in May 2017

ANAC (2011) Aviso de Licitação 02/2011 (Tender Notice 02/2011), available in http://www2.anac.gov.br/GRU-VCP-BSB/, accessed in May 2017

ANAC (2013) Aviso de Licitação 01/2013 (Tender Notice 01/2013), available in http://www.anac.gov.br/participacao-social/audiencias-e-consultas-publicas/audiencias/2013/aud05/leilao.pdf, accessed in May 2017

ANAC (2016) Aviso de Licitação 01/2016 (Tender Notice 01/2016), available in http://www.anac.gov.br/assuntos/paginas-tematicas/concessoes/andamento/edital-e-anexos-1/01-edital.pdf, accessed in May 2017

ANG, Siah Hwee; BENISCHKE, Mirko H.; DOH, Jonathan P. The interactions of institutions on foreign market entry mode. Strategic Management Journal, v. 36, n. 10, p. 1536-1553, 2015

BITTENCOURT, Geraldo Moreira; MATTOS, Leonardo Bornacki de; LIMA, João Eustáquio de. Heterogeneidade institucional e o ingresso de investimento direto estrangeiro na economia brasileira. Estudos Econômicos (São Paulo), v. 46, n. 2, p. 281-310, 2016

BROUTHERS, Keith D. A retrospective on: Institutional, cultural and transaction cost influences on entry mode choice and performance. Journal of International Business Studies, v. 44, n. 1, p. 14-22, 2013.

CABRAL, S.; SILVA JR.,  A. F. PPPS e decisões de investimento na construção de estádios de futebol. Organizações & Sociedade, (PPPs and investment decisions in the construction of soccer stadiums. Organizations and Society) v. 16, n. 48, p. 39–58, 2009.

CALDERÓN, C.; SERVÉN, L. The Effects of Infrastructure Development on Growth and Income Distribution. World Bank Publications Working Paper, v. 3400, 2004.

CANTWELL, J.; DUNNING, J. H.; LUNDAN, S. M. An evolutionary approach to understanding international business activity: The co-evolution of MNEs and the institutional environment. Journal of International Business Studies, v. 41, n. 4, p. 567–586, 2010.

CONTRACTOR, Farok J. et al. Institutional, cultural and industry related determinants of ownership choices in emerging market FDI acquisitions. International Business Review, v. 23, n. 5, p. 931-941, 2014.

CUI, Lin; JIANG, Fuming. Behind ownership decision of Chinese outward FDI: Resources and institutions. Asia Pacific Journal of Management, v. 27, n. 4, p. 751-774, 2010.

CUI, Lin; JIANG, Fuming. State ownership effect on firms' FDI ownership decisions under institutional pressure: A study of Chinese outward-investing firms. Journal of international business studies, v. 43, n. 3, p. 264-284, 2012.

DACIN, M. T.; KOSTOVA, T.; ROTH, K. Institutional Theory in the Study of Multinational Corporations: a Critique and New Directions. Academy of Management Review, v. 33, n. 4, p. 994–1006, 2008.

DIKOVA, Desislava; VAN WITTELOOSTUIJN, Arjen. Foreign direct investment mode choice: entry and establishment modes in transition economies. Journal of international business studies, v. 38, n. 6, p. 1013-1033, 2007.

GILLEN, D.; MANTIN, B. The importance of concession revenues in the privatization of airports. Transportation Research Part E: Logistics and Transportation Review, v. 68, p. 164–177, 2014.

GUASCH, J. L.; LAFFONT, J.-J.; STRAUB, S. Infrastructure Concessions in Latin America: Government-led Renegotiations. p. 1–45, 2005.

GUASCH, J. L.; STRAUB, S.; LAFFONT, J.-J. Renegotiation of Concession Contracts in Latin America. Policy Research Working Paper, n. April, p. 1–41, 2003.

INFRAERO, Concessões de Aeroportos (Airport Concessions) 2016, Available in  http://www.infraero.gov.br/index.php/br/transparencia/concessao.html, Accessed in May, 2017

KIRKPATRICK, C.; PARKER, D.; ZHANG, Y.-F. Foreign direct investment on infrastructure in developing countries: does regulation make a difference? Transnational Corporations, v. 15, n. 1, p. 143–171, 2006.

MEYER, Klaus E. Institutions, transaction costs, and entry mode choice in Eastern Europe. Journal of international business studies, v. 32, n. 2, p. 357-367, 2001.

MEYER, Klaus E. et al. Institutions, resources, and entry strategies in emerging economies. Strategic management journal, v. 30, n. 1, p. 61-80, 2009.

MORSCHETT, Dirk; SCHRAMM-KLEIN, Hanna; SWOBODA, Bernhard. Decades of research on market entry modes: what do we really know about external antecedents of entry mode choice?. Journal of International Management, v. 16, n. 1, p. 60-77, 2010.

NORTH, D. C. Institutions Published by: American Economic Association Institutions. The Journal of Economic Perspectives, v. 5, n. 1, p. 97–112, 1991.

PEREIRA NETO, C. M. DA S. et al. Pro-competition rules in airport privatization: International experience and the Brazilian case. Journal of Air Transport Management, v. 54, p. 9–16, 2016.

RAMAMURTI, R.; DOH, J. P. Rethinking foreign infrastructure investment in developing countries. Journal of World Business, v. 39, n. 2, p. 151–167, 2004.

SAWANT, R. J. The economics of large-scale infrastructure FDI: The case of project finance. Journal of International Business Studies, v. 41, n. 6, p. 1036–1055, 2010.

SHAVER, J. Myles. Do we really need more entry mode studies?. Journal of International Business Studies, v. 44, n. 1, p. 23-27, 2013.

TUROLLA, F. A. TOWARDS A THEORY OF INTERNATIONAL PRODUCTION OF INFRASTRUCTURE SERVICES. Revista Eletrônica de Negócios Internacionais, v. 8, n. 2, p. 17–30, 2013.

VAN DEN HURK, M. Learning to contract in public–private partnerships for road infrastructure: recent experiences in Belgium. Policy Sciences, v. 49, n. 3, p. 309–333, 2016.

WATTS J. (2017) Brazil operation car wash: is this the biggest corruption scandal in history? Article available in https://www.theguardian.com/world/2017/jun/01/brazil-operation-car-wash-is-this-the-biggest-corruption-scandal-in-history, accessed in June 2017

WILLIAMSON, Oliver E. The economic institutions of capitalism: firms, markets, relational contracting. New York: The Free Press, 1985 XIV 450 p.

WILLIAMSON, Oliver E. Markets and hierarchies: analysis and antitrust implications: a study in the economics of internal organization. New York: The Free Press, 1975 286 p.

WOOD, G. and DEMIRBAG, M. Handbook of institutional approaches to international business, Edward Elgar Publishing 2012 618 p. (Reference & Research Book News, Vol. 27 Issue 5) ISBN  9781849807685

YIN ROBERT, K. Case study research: design and methods. sage publications, 1994.

YIN, Robert K. Case study methods. Handbook of complementary methods in education research, v. 3, p. 111-122, 2006.

UNCTAD (2008). World investment report 2008: Transnational corporations and infrastructure challenge. New York: United Nations Publications.


Conference registration is required in order to view papers.