Managing In Latin Americ Common Issues And A Research Agenda

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Academy of Management Perspectives










Managing in Latin America:
Common Issues and a Research Agenda by Roberto S. Vassolo, Julio O. De Castro, and Luis R. Gomez-Mejia

Executive Overview
Latin America is a paradoxical region. It has unique conditions that make it one of the most attractive contexts worldwide for doing business, but it also faces serious challenges that severely underscore these opportunities. We apply a simple framework of analysis to describe the Latin American business environment and detect research opportunities. For that, we focus on four aspects of the region: (1) the institutional context, (2) the macroeconomic environment, (3) the consumer profile, and (4) the natural resource endowments. We summarize firms’ strategic choices that result from this context and analyze their consequences for new business creation, incumbents’ survival and growth, and sources of competitive advantages. We conclude by outlining a management research agenda.


atin America is a paradoxical region. The land is endowed with abundant natural resources, and the population density is relatively low. It has a relatively strong cultural homogeneity, with most of its inhabitants speaking either Spanish or
Portuguese and belonging to a Christian religion.
Relatively few military or religious conflicts have happened there, compared with regions such as
Africa and Europe. There is only one remaining non-democratically elected government in the region, the smallest number for any region in the world, including the European continent if Eastern Europe and the Near East are included. Rapid population growth over the past 50 years has resulted in a total population in 2011 of nearly 600 million (Population Reference Bureau, 2011), which is roughly that of all of Europe combined.
Economically, Latin America is the second most important emerging region in the world, after Southeast Asia, with an aggregated gross

domestic product (GDP) roughly that of China’s and three times larger than India’s. Brazil, the largest economy in the region, has the secondlargest capital market among emerging economies after China (World Bank, 2008). Even though per capita income in Latin America is much lower overall than the median per capita income in the
European Union and the United States, total purchasing power in Latin America has increased faster than in most developed and emerging economies since the 1950s.
Despite these incredibly favorable conditions, the business environment still presents important challenges both for companies trying to carry out business in the region and for local companies trying to internationalize their operations. This conundrum not only challenges daily managerial activities but also generates important research opportunities. In this article we summarize the most salient characteristics of the Latin American

* Roberto S. Vassolo ( is Associate Professor at IAE Business School, Department of Business Policy, Universidad
Austral, Buenos Aires.
Julio O. De Castro ( is Professor at IE University, IE Business School, Department of Entrepreneurship, Madrid.
Luis R. Gomez-Mejia ( is Benton Cocanougher Chair in Business, Department of Management, Texas A&M
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Vassolo, De Castro, and Gomez-Mejia

business environment and their implications at the firm level, and outline a plausible research agenda. Briefly, the most salient characteristics of the
Latin American business environment are:
1. Despite marked improvements in the last decades, the institutional context is still vulnerable, and the region