Business groups and their corporate strategies on the Argentine roller coaster of competitive and anti-competitive shocks
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Argentine economic history can be pictured as a series of severe economic ups and downs, which created unique managerial challenges for growing businesses. In this article we show how Argentine entrepreneurs have successfully crafted strategies and organizational forms to cope with this economic “roller coaster.” Our work is founded on the resource-based view, state development and market-failure theories, and relies on data from historical evidence, surveys, and thorough interviews with CEOs of the largest Argentine firms--known as Argentine Business Groups (ABGs). We found that ABGs generally expanded their corporate portfolios in periods of higher uncertainty by skillfully maneuvering through labor and capital market deficiencies and leveraging preferred foreign and local contacts and opportunities. We also found that in response to the Argentine market-oriented reforms of the 1990s, many ABGs trimmed their business portfolios and expanded internationally to compete more effectively. As for the recent economic turmoil, internationally diversified ABGs who relied more heavily on managerial teams with local expertise had a competitive advantage over ABGs with an exclusive local market focus or even multinational subsidiaries relying on international managerial teams. We derive lessons for firms managing businesses in similar environments and those wishing to reap opportunities in Argentina.