IS FOREIGNNESS A SOURCE OF COMPETITIVE ADVANTAGE IN THE BRAZILIAN PHARMACEUTICAL INDUSTRY?

Authors

  • Ricardo Itapema de Castro Monteiro FGV EAESP
  • Hsia Hua Sheng FGV EAESP

DOI:

https://doi.org/10.51320/rmc.v22i2.1246

Keywords:

liability of foreignness, asset of foreignness, working capital, profitability, pharmaceutical industry

Abstract

During the first decade of the 21st century, the accelerated growth of the pharmaceutical market in Brazil attracted investments from multinational pharmaceutical companies. National companies followed this investment trend, and the industry matured, and competition intensified. However, companies that operate in a foreign, new environment, driven by unfamiliar competitive forces encounter additional costs to operate. Using data from 2011 to 2016, this study employs panel data methodology with fixed effects using a sample of twenty-two pharmaceutical companies, eleven Brazilian subsidiaries of multinationals and eleven national companies, with the objective to investigate whether foreign companies operating in Brazil incur a liability of foreignness (LOF), which refers to these additional operating costs. This study contributes to the literature by evaluating the impact of Liability of Foreignness on working capital and profitability in the pharmaceutical sector. Our findings suggest that MNEs have a competitive disadvantage in inventory management compared to local companies.

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Author Biographies

Ricardo Itapema de Castro Monteiro, FGV EAESP

Finance executive with experience in Pharmaceuticals and Consumer Goods at companies in different stages (start-up, acquisition, integration of divisions, post merge integration, strategic re-alignment and crisis / restructuring). Ricardo has a Master's Degree in Finance and Controlling from FGV EAESP and a Bachelor in Business Administration by the same instituion.

Hsia Hua Sheng, FGV EAESP

Hsia Hua Sheng é especialista em Finanças Internacionais. Ele estuda Investimento, Financiamento, Riscos e Capital de Giro no Mercado Emergente. Atualmente, Sheng é professor associado de finanças na FGV- EAESP e CFO do Bank of China no Brasil. Ele é Economista pela Universidade de São Paulo, Doutor e Mestre em administração em Finanças pela FGV-EAESP e foi Visiting Scholar em New York University. Possui videos no Youtube (Canal Finanças 101), livros, casos e artigos nas importantes publicações acadêmicas nacionais e internacionais, tais como Journal World Business e Journal Corporate Finance, Emerging Market Review, International Review of Financial Analysis e outros. Ele também é coordenador de Núcleo de Estudo de Gestão Financeira Internacional da FGV. Alem da sua carreira academica, ele trabalhou nas empresas e bancos multinacionais tais como Votorantim Celulose e Papel, Citigroup, Credicard e nos projetos especiais do Banco Máxima e do Fundo Tarpon. E foi gerente sênior da consultoria da Deloitte Touche Tohmatsu e diretor técnico e sócio das duas maiores empresas de software de riscos financeiros no Brasil: Maps Soluções Financeiras SA e Luz Engenharia Financeira.

Published

2021-08-20

How to Cite

Monteiro, R. I. de C., & Sheng, H. H. (2021). IS FOREIGNNESS A SOURCE OF COMPETITIVE ADVANTAGE IN THE BRAZILIAN PHARMACEUTICAL INDUSTRY?. Revista Mineira De Contabilidade, 22(2), 23–36. https://doi.org/10.51320/rmc.v22i2.1246

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