The paradox of multidomestic strategies in a globalizing world: Evidence from nonmarket strategies in developing countries

Privatization and deregulation in many sectors throughout the world have created opportunities for internationalization and foreign market entry. These same processes, however, have also entailed or exacerbated institutional instability in potential host countries, enhancing the risk of indirect expropriation through adverse regulatory measures. This paper examines the development and nature of the strategies followed by several U. S. and Spanish utilities that have entered Latin American utility markets during the 1990s. Using both secondary data and interviews with company executives, we find a wide variation in the nonmarket strategies followed by foreign entrants. We also find evidence of convergence of nonmarket strategies around a multidomestic pattern.