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Strategic management in Latin America
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Journal of Business Research 61 (2008) 587 – 589
Strategic management in Latin America Patricio Donoso a,⁎ , Victoria L. Crittenden b,1 a
Escuela de Administraticiôn, Pontificia Universidad Catôlica de Chile, Vicuna mackenna 4860, Macul, Santiago Chile Department of Marketing, Carroll School of Management, Boston College, Chestnut Hill, MA 02467, United States
b
Received 1 February 2007; received in revised form 1 April 2007; accepted 1 June 2007
Abstract This paper presents conclusions about the kind of strategic management research being done in and about Latin America. The conclusions are based on a selection of papers presented during the conference. The fifteen works that this volume includes were selected from 63 conference presentations through a rigorous double blind review process. The 63 conference presentations were selected from among more that 100 initial proposals. © 2007 Published by Elsevier Inc. Keywords: Scholarly publications; Macroeconomics; Competitiveness
1. Introduction Latin America is characterized by a low production of academic publications, particularly in the economics and business-management fields. However, the low economic growth rates and high volatility experienced by Latin American countries, combined with the poor evaluations obtained in international competitiveness indexes, should be contributing to increased academic concern and, thus, more academic contributions. Topics such as macroeconomics, market efficiency, technological readiness, business sophistication, innovation, and ethics should be of research interest to Latin American scholars. To encourage greater academic scholarship in Latin America, the Second International Strategic Management Conference in Latin America was held at Pontificia Universidad Católica de Chile in January of 2007. This first conference was held in Alajuela, Costa Rica in January of 2005. This special issue of the Journal of Business Research covers a wide variety of topics relevant to strategic management practice and research in Latin America. All of the papers published in this issue were presented at the conference in Chile. There were 63 ⁎ Corresponding author. E-mail addresses: [email protected] (P. Donoso), [email protected] (V.L. Crittenden). 1 Tel.: +1 617 552 0430; fax: +1 617 552 6677. 0148-2963/$ - see front matter © 2007 Published by Elsevier Inc. doi:10.1016/j.jbusres.2007.06.032
submissions to this special issue, with 15 papers selected for publication. 2. Macroeconomic and scholarship issues Latin America is referred to as “a continent of hope,” due primarily to its large, growing, and young population (more than half of the population is under 25 years of age). However, the continent's economic growth is quite modest and volatile. Recursive cycles of prosperity, stagnation, and negative growth characterizes most Latin American economies during the twentieth century (Solimano and Soto 2005). As Silva and Majluf report in their article in this issue, a high level of ownership concentration, with much diversified family-owned businesses dominating the markets, characterizes most Latin American business environments. Consequently, Latin American countries are evaluated poorly in various international competitiveness rankings. The Global Competitive Index developed by the World Economic Forum (WEF) measures national competitiveness in relation with a set of nine factors that determine the level of productivity of a country. According to this index, all Latin American countries (with the exception of Chile which is ranked 27) are listed below the fiftieth position in annual evaluations. In particular, a bad assessment is observed in macroeconomics, market efficiency, technological readiness, business sophistication, and innovation.
588
P. Donoso, V.L. Crittenden / Journal of Business Research 61 (2008) 587–589
Table 1 Select Latin American country information: population, GDP, and GCI rankings Country
Population
Argentina Brazil Bolivia Chile Colombia Costa Rica Ecuador El Salvador Guatemala Jamaica Mexico Panama Peru Uruguay Venezuela
Gross Domestic Product
Global Competitive Index
Inhabitants 2006 (thousands)
Growth 2000–2005 (%)
Year 2005 (MMUS$)
r a 2002–2005 (%)
sr c 2002–2005 (%)
GCI ranking 2005
GCI ranking 2006
38,971 190,127 9627 16,436 46,772 4399 13,408 6991 13,018 2662 107,537 3284 28,349 3478 27,031
1.0% 1.4% 2.2% 1.1% 1.7% 1.9% 1.4% 1.8% 2.5% 0.5% 1.4% 1.8% 1.5% 0.7% 1.8%
183,196 797,365 9333 115,247 122,610 20,020 36,488 16,074 31,647 9860 768,436 15,483 79,382 16,791 140,191
4.0% 2.4% 2.5% 3.6% 3.1% 3.1% 4.4% 1.7% 1.9% 1.2% 2.0% 4.1% 3.8% 3.2% 3.6%
10.0% 1.8% 0.8% 2.0% 1.5% 1.5% 1.9% 0.4% 0.5% 0.6% 1.5% 2.5% 1.0% 9.8% 13.1%
54 57 101 27 58 56 87 60 95 63 59 65 77 70 84
69 64 97 27 65 53 90 61 75 60 58 57 74 73 88
Source: Annual Statistics for Latin America and the Caribbean—Economic Commission for Latin America and the Caribbean, ECLAC-UN (2006), www.eclac.org; Annual Global Competitive Index, World Economic Forum (2005 and 2006), www.weforum.org. a Average annual GDP rates (r). c r standard deviation.
Table 1 summarizes relevant information about Latin American countries: actual population (2006) and population growth (2002–2005); GDP (2005), average GDP rates and standard deviations (2002–2005); and 2005–2006 WEF Rankings with the Global Competitive Index. Although these economic and competitiveness figures should motivate strong commitment of Latin American scholars to economic and management-related research, a very low publication productivity rate is observed on the continent. Based on the Social Science Citation Index (SSCI), Koljatic and Silva (2001) reveal that, for the 1995–1999 period, only four Latin American economies—Argentina, Brazil, Chile and México—produced substantial research in these fields. With the exception of Brazil, business and management-related research is much scarcer than in economics. Table 2 shows the total count of business and economics articles that have at least one co-author with a Latin American university address (fractional count), the percentage of business-management-related articles, the average number of citations of articles on business/management and economics since their publication (includes those with zero citation), and the relation between fractional count with population and GDP.
Koljatic and Silva (2001) suggest that the level of citation, the publication/population, and the population/GDP indicators for the four countries are quite poor. Koljatic and Silva (2001) conclude that few Latin American scholars are getting involved in mainstream research that is visible internationally and that the majority of Latin American scholars produce very little or no research in these fields. Using Thomson Scientifics' National Science Indicators (NSI), Contreras, Edwards, and Mizala (2006) conducted a similar study for the period 1981–2003. Their findings confirm the scarce scholarly production in Latin American countries. The publication/population and the impact index continue to be very low, compared with more developed countries such as the USA (Table 3). In both studies, Chile performs better than other Latin American countries; although compared with more developed realities, the outcome continues to be poor.
Table 2 Business/management and economics publication productivity in Latin America, 1995–1999
Table 3 Business/management and economics publication productivity in Latin America 1983–2004
Country
Country
Fractional count (N) Total articles (per million inh.) Impact
Argentina Brazil Chile Mexico Latin America USA
148 462 236 316 1435 112,346
Argentina Brazil Chile Mexico
Business/ management articles (%)
Fractional Times count (N) cited (average)
Fractional count/ population
Fractional count/ GDP
21.2 52.9 33.4 28
65 142.6 47 73.1
1.9 0.9 3.3 0.8
0.3 0.3 1.0 0.3
0.5 0.7 0.8 0.6
Note. GDP = GDP at market prices in millions of dollars/1000. Adapted from Koljatic and Silva (2001).
3. The conference The Second International Conference on Strategic Management in Latin America, co-sponsored by the EAPUC (the
0.3 0.2 1 0.2 0.2 26
2.4 3.9 7.9 3.4 4.0 9.5
Note. Impact: number of citations divided by number of articles published. Adapted from Contreras, Edwards, and Mizala (2006).
P. Donoso, V.L. Crittenden / Journal of Business Research 61 (2008) 587–589 Table 4 Second International Strategic Management Conference: abstracts, papers presented and manuscripts selected for final publication Country
Abstracts sent
Articles presented at conference
Articles selected for the publication
Argentina Brazil Chile Colombia Costa Rica Mexico Peru Venezuela Latin America USA Other Total
1 15 44 4 9 14 2 2 91 12 5 108
0 4 24 4 4 6 1 1 49 12 2 63
0 1 9 1 1 0 0 0 12 3 0 15
Note: Countries are identified by the first author on the paper.
Catholic University's School of Business Administration, Escuela de Administración, Pontificia Universidad Católica de Chile) and the Journal of Business Research, was held on January 4–5, 2007 at the University's main Campus in Santiago, Chile. The general focus of the conference was the current state of strategic management practice and scholarship in Latin America. Empirical and applied papers based on actual experiences, or on what should be of research interest in the region, were invited and presented during the conference. The purpose of the conference was to gather scholars and practitioners of strategic management in Latin America to exchange theoretical insights, empirical research results, and applications on issues of importance to Latin America. This special issue of the Journal of Business Research includes fifteen works selected via a rigorous double blind review process from among 63 conference presentations. The presentations were chosen from among more that 100 initial proposals. Table 4 provides a geographic overview of conference participation. That data show the number of abstracts submitted to the conference committee, the number of papers presented during the conference, and the papers selected for final publication. 4. Special issue topics Over two decades ago, Wheelen and Hunger (1986) identify a hierarchy of strategy within a company. At the highest level is the corporate strategy, which includes decisions about the types of business the firm will be in and the allocation of key company resources. The second level of strategy, business strategy, associates with a subsidiary or business unit and may revolve around, for example, a group of similar products. The next level of strategy, functional strategy, supports the corporate and business-level strategies by pulling together various activities necessary to gain the desired competitive advantage. This special issue opens with nine papers that address corporate and business-level issues in Latin American business management. The paper by Brenes, Mena, and German focuses on key variables in the strategy implementation process that lead to
589
improved competitiveness among Latin American firms. This paper, denoting the critical link between implementation and performance, sets the stage for four performance-related papers. Tarziján, Brahm, and Daiber evaluate the main determinants of business performance; Silva and Majluf study the relationship between family ownership and performance; Lefort and Urzúa look at performance within the context of boards and ownership concentration; Olavarrieta and Friedman examine performance within the context of marketing and innovation variables. Following on the heels of Olavarrieta and Friedman is the paper by Rosa, Qualls, and Fuentes that concentrate on the global need for creativity and innovation. Next, papers by Rodríguez and Koljatic and Silva take up issues related to company alliances in Latin America. Since a discussion of macro variables would be not complete without an inclusion of social and ethical issues, the study by Robertson, Gilley, Crittenden, and Crittenden examines corruption within the Latin American marketplace. These authors insinuate a lack of depth and breadth with respect to corruption research in Latin America, which is particularly surprising since Nascimento and Cooke (2006) offer corruption as one of two main reasons for poor business development and varied prosperity in Latin America. Functional strategy issues are examined in six papers. Walker focuses upon Latin American finance by analyzing strategic currency hedging and global portfolio investments. Singer and Donoso offer an operations/production perspective and formulate an optimization model for the sawmill industry. Human resource issues are at the forefront in the paper by Bruno and Lay as they examine personal values and leadership effectiveness. Two papers study marketing-related issues. Milberg and Sinn look at global branding issues, while Hidalgo, Manzur, Olavarrieta, and Farias examine long-term price matching effects on customer retention. In the final paper, Nasco, Toledo, and Mykytyn use the Theory of Planned Behavior to predict e-commerce adoption in Chilean SMEs. References Contreras C, Edwards G, Mizala A. The scientific productivity in economics and business/management in Chile: a comparative analysis. Cuad Econ 2006;43:331–54. Economic Commission for Latin America and the Caribbean. Annual statistics for Latin America and the Caribbean, ECLAC-UN 2006. http://www.eclac.org, downloaded 5/27/2007. Koljatic M, Silva M. The international publication productivity of Latin American countries in the economics and business administration fields. Scientometrics 2001;51(2):381–94. Nascimento S, Cooke D. Macro: corruption and inequality hinder development. Gazeta Mercantil Invest News; 2006 [April 6.]. Solimano A, Soto R. Economic growth in Latin America in the late 20th century: evidence and interpretation. Macroeconomic series, Economic Development Division, Economic Commission for Latin America and the Caribbean, ECLAC-UN; 2005. [February]. Wheelen TL, Hunger JD. Strategic management. Reading, MA: Addison Wesley Publishing Company; 1986. World Economic Forum 2005, 2006. Global competitiveness annual report, http://www.weforum.org, downloaded 5/10/2007.
Journal of Business Research 61 (2008) 587 – 589
Strategic management in Latin America Patricio Donoso a,⁎ , Victoria L. Crittenden b,1 a
Escuela de Administraticiôn, Pontificia Universidad Catôlica de Chile, Vicuna mackenna 4860, Macul, Santiago Chile Department of Marketing, Carroll School of Management, Boston College, Chestnut Hill, MA 02467, United States
b
Received 1 February 2007; received in revised form 1 April 2007; accepted 1 June 2007
Abstract This paper presents conclusions about the kind of strategic management research being done in and about Latin America. The conclusions are based on a selection of papers presented during the conference. The fifteen works that this volume includes were selected from 63 conference presentations through a rigorous double blind review process. The 63 conference presentations were selected from among more that 100 initial proposals. © 2007 Published by Elsevier Inc. Keywords: Scholarly publications; Macroeconomics; Competitiveness
1. Introduction Latin America is characterized by a low production of academic publications, particularly in the economics and business-management fields. However, the low economic growth rates and high volatility experienced by Latin American countries, combined with the poor evaluations obtained in international competitiveness indexes, should be contributing to increased academic concern and, thus, more academic contributions. Topics such as macroeconomics, market efficiency, technological readiness, business sophistication, innovation, and ethics should be of research interest to Latin American scholars. To encourage greater academic scholarship in Latin America, the Second International Strategic Management Conference in Latin America was held at Pontificia Universidad Católica de Chile in January of 2007. This first conference was held in Alajuela, Costa Rica in January of 2005. This special issue of the Journal of Business Research covers a wide variety of topics relevant to strategic management practice and research in Latin America. All of the papers published in this issue were presented at the conference in Chile. There were 63 ⁎ Corresponding author. E-mail addresses: [email protected] (P. Donoso), [email protected] (V.L. Crittenden). 1 Tel.: +1 617 552 0430; fax: +1 617 552 6677. 0148-2963/$ - see front matter © 2007 Published by Elsevier Inc. doi:10.1016/j.jbusres.2007.06.032
submissions to this special issue, with 15 papers selected for publication. 2. Macroeconomic and scholarship issues Latin America is referred to as “a continent of hope,” due primarily to its large, growing, and young population (more than half of the population is under 25 years of age). However, the continent's economic growth is quite modest and volatile. Recursive cycles of prosperity, stagnation, and negative growth characterizes most Latin American economies during the twentieth century (Solimano and Soto 2005). As Silva and Majluf report in their article in this issue, a high level of ownership concentration, with much diversified family-owned businesses dominating the markets, characterizes most Latin American business environments. Consequently, Latin American countries are evaluated poorly in various international competitiveness rankings. The Global Competitive Index developed by the World Economic Forum (WEF) measures national competitiveness in relation with a set of nine factors that determine the level of productivity of a country. According to this index, all Latin American countries (with the exception of Chile which is ranked 27) are listed below the fiftieth position in annual evaluations. In particular, a bad assessment is observed in macroeconomics, market efficiency, technological readiness, business sophistication, and innovation.
588
P. Donoso, V.L. Crittenden / Journal of Business Research 61 (2008) 587–589
Table 1 Select Latin American country information: population, GDP, and GCI rankings Country
Population
Argentina Brazil Bolivia Chile Colombia Costa Rica Ecuador El Salvador Guatemala Jamaica Mexico Panama Peru Uruguay Venezuela
Gross Domestic Product
Global Competitive Index
Inhabitants 2006 (thousands)
Growth 2000–2005 (%)
Year 2005 (MMUS$)
r a 2002–2005 (%)
sr c 2002–2005 (%)
GCI ranking 2005
GCI ranking 2006
38,971 190,127 9627 16,436 46,772 4399 13,408 6991 13,018 2662 107,537 3284 28,349 3478 27,031
1.0% 1.4% 2.2% 1.1% 1.7% 1.9% 1.4% 1.8% 2.5% 0.5% 1.4% 1.8% 1.5% 0.7% 1.8%
183,196 797,365 9333 115,247 122,610 20,020 36,488 16,074 31,647 9860 768,436 15,483 79,382 16,791 140,191
4.0% 2.4% 2.5% 3.6% 3.1% 3.1% 4.4% 1.7% 1.9% 1.2% 2.0% 4.1% 3.8% 3.2% 3.6%
10.0% 1.8% 0.8% 2.0% 1.5% 1.5% 1.9% 0.4% 0.5% 0.6% 1.5% 2.5% 1.0% 9.8% 13.1%
54 57 101 27 58 56 87 60 95 63 59 65 77 70 84
69 64 97 27 65 53 90 61 75 60 58 57 74 73 88
Source: Annual Statistics for Latin America and the Caribbean—Economic Commission for Latin America and the Caribbean, ECLAC-UN (2006), www.eclac.org; Annual Global Competitive Index, World Economic Forum (2005 and 2006), www.weforum.org. a Average annual GDP rates (r). c r standard deviation.
Table 1 summarizes relevant information about Latin American countries: actual population (2006) and population growth (2002–2005); GDP (2005), average GDP rates and standard deviations (2002–2005); and 2005–2006 WEF Rankings with the Global Competitive Index. Although these economic and competitiveness figures should motivate strong commitment of Latin American scholars to economic and management-related research, a very low publication productivity rate is observed on the continent. Based on the Social Science Citation Index (SSCI), Koljatic and Silva (2001) reveal that, for the 1995–1999 period, only four Latin American economies—Argentina, Brazil, Chile and México—produced substantial research in these fields. With the exception of Brazil, business and management-related research is much scarcer than in economics. Table 2 shows the total count of business and economics articles that have at least one co-author with a Latin American university address (fractional count), the percentage of business-management-related articles, the average number of citations of articles on business/management and economics since their publication (includes those with zero citation), and the relation between fractional count with population and GDP.
Koljatic and Silva (2001) suggest that the level of citation, the publication/population, and the population/GDP indicators for the four countries are quite poor. Koljatic and Silva (2001) conclude that few Latin American scholars are getting involved in mainstream research that is visible internationally and that the majority of Latin American scholars produce very little or no research in these fields. Using Thomson Scientifics' National Science Indicators (NSI), Contreras, Edwards, and Mizala (2006) conducted a similar study for the period 1981–2003. Their findings confirm the scarce scholarly production in Latin American countries. The publication/population and the impact index continue to be very low, compared with more developed countries such as the USA (Table 3). In both studies, Chile performs better than other Latin American countries; although compared with more developed realities, the outcome continues to be poor.
Table 2 Business/management and economics publication productivity in Latin America, 1995–1999
Table 3 Business/management and economics publication productivity in Latin America 1983–2004
Country
Country
Fractional count (N) Total articles (per million inh.) Impact
Argentina Brazil Chile Mexico Latin America USA
148 462 236 316 1435 112,346
Argentina Brazil Chile Mexico
Business/ management articles (%)
Fractional Times count (N) cited (average)
Fractional count/ population
Fractional count/ GDP
21.2 52.9 33.4 28
65 142.6 47 73.1
1.9 0.9 3.3 0.8
0.3 0.3 1.0 0.3
0.5 0.7 0.8 0.6
Note. GDP = GDP at market prices in millions of dollars/1000. Adapted from Koljatic and Silva (2001).
3. The conference The Second International Conference on Strategic Management in Latin America, co-sponsored by the EAPUC (the
0.3 0.2 1 0.2 0.2 26
2.4 3.9 7.9 3.4 4.0 9.5
Note. Impact: number of citations divided by number of articles published. Adapted from Contreras, Edwards, and Mizala (2006).
P. Donoso, V.L. Crittenden / Journal of Business Research 61 (2008) 587–589 Table 4 Second International Strategic Management Conference: abstracts, papers presented and manuscripts selected for final publication Country
Abstracts sent
Articles presented at conference
Articles selected for the publication
Argentina Brazil Chile Colombia Costa Rica Mexico Peru Venezuela Latin America USA Other Total
1 15 44 4 9 14 2 2 91 12 5 108
0 4 24 4 4 6 1 1 49 12 2 63
0 1 9 1 1 0 0 0 12 3 0 15
Note: Countries are identified by the first author on the paper.
Catholic University's School of Business Administration, Escuela de Administración, Pontificia Universidad Católica de Chile) and the Journal of Business Research, was held on January 4–5, 2007 at the University's main Campus in Santiago, Chile. The general focus of the conference was the current state of strategic management practice and scholarship in Latin America. Empirical and applied papers based on actual experiences, or on what should be of research interest in the region, were invited and presented during the conference. The purpose of the conference was to gather scholars and practitioners of strategic management in Latin America to exchange theoretical insights, empirical research results, and applications on issues of importance to Latin America. This special issue of the Journal of Business Research includes fifteen works selected via a rigorous double blind review process from among 63 conference presentations. The presentations were chosen from among more that 100 initial proposals. Table 4 provides a geographic overview of conference participation. That data show the number of abstracts submitted to the conference committee, the number of papers presented during the conference, and the papers selected for final publication. 4. Special issue topics Over two decades ago, Wheelen and Hunger (1986) identify a hierarchy of strategy within a company. At the highest level is the corporate strategy, which includes decisions about the types of business the firm will be in and the allocation of key company resources. The second level of strategy, business strategy, associates with a subsidiary or business unit and may revolve around, for example, a group of similar products. The next level of strategy, functional strategy, supports the corporate and business-level strategies by pulling together various activities necessary to gain the desired competitive advantage. This special issue opens with nine papers that address corporate and business-level issues in Latin American business management. The paper by Brenes, Mena, and German focuses on key variables in the strategy implementation process that lead to
589
improved competitiveness among Latin American firms. This paper, denoting the critical link between implementation and performance, sets the stage for four performance-related papers. Tarziján, Brahm, and Daiber evaluate the main determinants of business performance; Silva and Majluf study the relationship between family ownership and performance; Lefort and Urzúa look at performance within the context of boards and ownership concentration; Olavarrieta and Friedman examine performance within the context of marketing and innovation variables. Following on the heels of Olavarrieta and Friedman is the paper by Rosa, Qualls, and Fuentes that concentrate on the global need for creativity and innovation. Next, papers by Rodríguez and Koljatic and Silva take up issues related to company alliances in Latin America. Since a discussion of macro variables would be not complete without an inclusion of social and ethical issues, the study by Robertson, Gilley, Crittenden, and Crittenden examines corruption within the Latin American marketplace. These authors insinuate a lack of depth and breadth with respect to corruption research in Latin America, which is particularly surprising since Nascimento and Cooke (2006) offer corruption as one of two main reasons for poor business development and varied prosperity in Latin America. Functional strategy issues are examined in six papers. Walker focuses upon Latin American finance by analyzing strategic currency hedging and global portfolio investments. Singer and Donoso offer an operations/production perspective and formulate an optimization model for the sawmill industry. Human resource issues are at the forefront in the paper by Bruno and Lay as they examine personal values and leadership effectiveness. Two papers study marketing-related issues. Milberg and Sinn look at global branding issues, while Hidalgo, Manzur, Olavarrieta, and Farias examine long-term price matching effects on customer retention. In the final paper, Nasco, Toledo, and Mykytyn use the Theory of Planned Behavior to predict e-commerce adoption in Chilean SMEs. References Contreras C, Edwards G, Mizala A. The scientific productivity in economics and business/management in Chile: a comparative analysis. Cuad Econ 2006;43:331–54. Economic Commission for Latin America and the Caribbean. Annual statistics for Latin America and the Caribbean, ECLAC-UN 2006. http://www.eclac.org, downloaded 5/27/2007. Koljatic M, Silva M. The international publication productivity of Latin American countries in the economics and business administration fields. Scientometrics 2001;51(2):381–94. Nascimento S, Cooke D. Macro: corruption and inequality hinder development. Gazeta Mercantil Invest News; 2006 [April 6.]. Solimano A, Soto R. Economic growth in Latin America in the late 20th century: evidence and interpretation. Macroeconomic series, Economic Development Division, Economic Commission for Latin America and the Caribbean, ECLAC-UN; 2005. [February]. Wheelen TL, Hunger JD. Strategic management. Reading, MA: Addison Wesley Publishing Company; 1986. World Economic Forum 2005, 2006. Global competitiveness annual report, http://www.weforum.org, downloaded 5/10/2007.