Person: Salvaj, Erica
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Publication Political connections, the liability of foreignness, and legitimacy: A business historical analysis of multinationals’ strategies in Chile(2018) Bucheli, Marcelo; Salvaj, EricaResearch Summary: We conduct a historical analysis of the multinational corporations’ strategy of creating connections with a host country’s elite as a way of legitimizing its operations in contexts characterized by long-term political, social, and economic changes. We argue that the success or failure of these strategies depends on (a) the perceived legitimacy of these connections among a host country’s society during times of change and (b) the capability of the multinational’s political connections to shield it from challenges arising when the host country’s social structure is undergoing deep transformations. We outline and follow a business historical approach that combines the theoretical frameworks of international business, strategy, organizational theory, and political science to analyze multinationals operating in Chile’s energy and telecommunications sectors from 1932 to 1973. Managerial Summary: Western multinationals face hard challenges when trying to legitimize their operations vis-à-vis the host country’s societies in emerging and underdeveloped countries. One strategy developed by multinationals to neutralize potential challenges to their legitimacy has been to establish connections with influential members of the host country’s elites. We study how this strategy fares in host countries that are undergoing dramatic political and economic changes. We first argue that overtly maintaining open connections with an elite that is viewed as a relic of an illegitimate past can become a liability. And, second, that highly visible connections are more likely to become a liability in times of political and social change than less visible ones. We illustrate our arguments with a historical study of the strategies followed by American telecommunications and oil multinationals in Chile.Publication Better together: How multinationals come together with business groups in times of economic and political transitions(John Wiley & Sons, Inc., 2018) Bucheli, Marcelo; Salvaj, Erica; Minyoung, Kim; Salvaj, EricaThis article studies two interrelated questions. First, why did business groups in emerging markets thrive and prevail after pro‐market reforms were implemented in their countries? And, second, what type of adaptation strategies can multinational corporations develop in order to be competitive in economies dominated by business groups? By conducting an archive‐based historical network analysis of business groups in Chile during periods of major economic and political transitions, we maintain that business groups were created in periods of protectionism as a way to navigate economies with strong state participation or inefficient markets. In this process, these groups endogenously created an economy with market imperfections resulting from the dominance of these business groups. This means that the transition toward more open markets did not necessarily create more competitive environments and that elites in emerging economies were unwilling to abandon the advantages of having links between their businesses. Multinationals entering this economy adapted by becoming business groups themselves and creating links with other business groups. In sum, strategies devised as means to reduce market imperfections created new imperfections that incentivized the business groups to retain their structure and forced multinationals to become business groups.