Is foreignness a source of competitive advantage in the Brazilian pharmaceutical industry?: an exploratory study

• Autor(a) principal: Monteiro, Ricardo Itapema de Castro
• Data de Publicação: 2018
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Institucional do FGV (FGV Repositório Digital)
• Texto Completo: https://hdl.handle.net/10438/24772
• topic: Liability of foreignness; Asset of foreignness; Working capital; Profitability; Pharmaceutical industry; Capital de giro; Lucratividade; Indústria farmacêutica; Administração de empresas; Empresas multinacionais; Indústria farmacêutica - Brasil; Capital de giro; Empresas multinacionais - Lucratividade

The accelerated growth of pharmaceutical market in Brazil, in the past ten years, attracted and intensified investments from multinational pharmaceutical companies. National companies also invested heavily. The industry matured and competition intensified. However, a company that operates in a foreign, new environment, driven by unfamiliar competitive forces generally encounters additional costs to operate. This phenomenal is called ‘liability of foreignness’ (LOF). Still, the foreign branch of a company may also have unique advantages due to their being foreign, the so called ‘asset of foreignness’ (AOF). Do these theoretical expectations hold in the Brazilian pharmaceutical industry? The paper employs panel data methodology with fixed effects on four regression models for a sample of 22 companies (11 Brazilian subsidiaries of multinationals and 11 national companies) from this industry. Moreover, the models utilized were proved by other researchers, in different markets segments and countries. The findings support the hypothesis formulated by these scholars and suggest the existence of “Liability of Foreignness”.