Spanish Foreign Direct Investments in Latin America: Internationalization Strategies and Financial Management Practices

By Curci, Roberto; Cardoza, Guillermo | Journal of Comparative International Management, June 2009 | Go to article overview

Spanish Foreign Direct Investments in Latin America: Internationalization Strategies and Financial Management Practices


Curci, Roberto, Cardoza, Guillermo, Journal of Comparative International Management


This study analyzes the internationalization strategies and the financial management practices of seven Spanish companies with the largest volume of investments in Latin America. The companies selected for an in-depth analysis represent approximately 80 percent of the total Spanish foreign investments during the period of analysis. Their investments have taken place mainly in service sectors such as banking, energy, and telecommunications. The study identifies the market conditions and the corporate strategies that have allowed these Spanish companies to successfully initiate and expand business activities into Latin America. The findings suggest Spanish investors have strengthened their global competitiveness and have accomplished greater financial results.

1. Introduction

This study presents a comprehensive analysis of the corporate internationalization strategies and financial management practices implemented by seven Spanish companies to initiate and expand operations into Latin America. Such practices include strategies for domestic or international financing, international capital budgeting and risk management for exposures such as foreign exchange risk, credit risk, institutional and country risks. All companies analyzed in this study had limited international experience before engaging in foreign direct investments (FDIs) in Latin America. Therefore, this study provides insights on the formation of Spanish multinational enterprises (MNEs).

Previous studies of corporate internationalization strategies suggest that the analysis of success factors should be centered on the capacity of companies to exploit their knowledge and capabilities in new markets more than on factors such as their operational cost and/or efficiency (Dunning, 1977; Johansson and Vahlme, 1977; Caves, 1982, 1985; and Madhock, 1998). In fact, when companies expand into international markets they strategically use their knowledge and capabilities in the development of those new markets. The understanding of successful internationalization strategies is of interest to researchers and corporate executives alike.

This study begins by analyzing the universe of Spanish foreign direct investments into Latin America. We utilize Spanish investors' records obtained from Standard & Poor's Research Insight. Subsequently, to analyze corporate internationalization strategies and financial management practices we collect primary data through personal interviews with financial executives of the Spanish companies with the largest volume of foreign direct investments in Latin America. In effect, seven Spanish companies were selected for an in-depth analysis. These companies represent approximately 80 percent of the total Spanish foreign investments during the period of analysis.

This study identifies the antecedents and factors that explain the internationalization of premier Spanish companies in Latin America. Evaluating the competitive advantages, risk factors, and management practices associated with such Spanish investments in Latin America, the study analyzes the seven Spanish companies' strategies associated with corporate decision-making in areas such as financing and investment.

The results suggest that the selected Spanish companies with foreign direct investments in Latin America have been successful. The survey respondents indicate that their investments have strengthened their global competitiveness and have generated the expected financial results. Nevertheless, as the 1999 crisis in Argentina occurred, it became evident that economic volatility, political instability, institutional fragility and consequently, a high level of uncertainty within these emerging economies, have conditioned the investment strategies forcing the Spanish companies under study to periodically adjust their financial practices (Cardoza et al., 2007; Fornes and Cardoza, 2008).

The following sections of this study present a theoretical background regarding the internationalization of corporations, a synthesis of economic development and foreign direct investment in Latin America, a description of the research methodology, a discussion of results and finally some concluding remarks. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Spanish Foreign Direct Investments in Latin America: Internationalization Strategies and Financial Management Practices
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.