The Other Latecomers

This book investigates the phenomenon of latecomer firms in Argentina and their ability to thrive and catch up with global competitors despite facing adverse economic conditions. The chapter outlines three specific objectives: (1) evaluating the performance of latecomer firms in Argentina compared to other firms under similar economic conditions; (2) identifying the disadvantages faced by latecomer firms in Argentina due to macroeconomic, mezzo-economic, microeconomic, institutional, and historical factors; and (3) investigating the firm-level characteristics that enable successful latecomer firms to overcome these disadvantages.

The research begins by discussing the theoretical and contextual frameworks, drawing on the contributions of Gerschenkron and Nelson. It argues that latecomer firms in unfavorable conditions may still have strategic opportunities to catch up due to the diversity of firm forms and unique features. The specific context of Argentina is examined, highlighting four key latecomer disadvantages: distant export markets, technological backwardness, adverse macroeconomy, and corporate incoherence.

A statistical analysis of manufacturing firms’ performance during Argentina’s severe economic crisis from 1998 to 2001 is presented. The analysis utilizes the Second Innovation Survey of Argentina and explores the relationship between firm characteristics and performance indicators. The study reveals the potential resilience of manufacturing enterprises in adverse economic conditions and emphasizes the role of non-technological firm features, such as organizational innovations, in mitigating the impact of the crisis.

In-depth case studies of two successful latecomer firms in the capital goods industry, TENARIS and IMPSA, are included to complement the statistical analysis. These case studies examine the unique paths taken by these firms to survive, grow, and catch up with global competitors. The analysis explores how these firms overcame specific latecomer disadvantages and provides insights into the corporate strategies, organizational structures, and core capabilities that contributed to their differential performance.

In conclusion, this book contributes to the understanding of latecomer firms in Argentina and their ability to succeed in adverse economic conditions. The findings highlight the importance of considering both quantitative and qualitative approaches in studying latecomer firms and offer valuable insights for policymakers and practitioners seeking to support the growth and catch-up of such firms in challenging economic environments.

This chapter explores the theoretical and contextual frameworks surrounding the concept of latecomer firms and their ability to catch up in terms of economic development. The theoretical framework examines various models and studies on catching-up processes at both the country and firm level. It emphasizes the significance of firm-level catch-up and highlights the role of capabilities, strategies, and institutional environments in driving this process. The chapter draws on a range of theoretical perspectives and empirical evidence to provide a comprehensive understanding of the factors that contribute to the success of latecomer firms.

Shifting to the contextual framework, the chapter focuses on the Latin American context, with a specific emphasis on Argentina. It investigates the unique latecomer disadvantages faced by firms in this region, including distant global markets, technological backwardness, adverse macroeconomy, and corporate incoherence. The chapter discusses how these disadvantages have hindered the catch-up efforts of firms in Argentina and other Latin American countries. It also examines the impact of different policy regimes on industrialization and economic development in the region.

Additionally, the chapter briefly explores the capital goods industry and its potential for latecomer firms to catch up through the provision of integrated solutions. It highlights the growing importance of service-intensive solutions and the challenges faced by manufacturing firms in delivering these solutions. The chapter emphasizes the need for organizational flexibility and customer-centric strategies in order to succeed in the evolving landscape of the capital goods industry.

Overall, this chapter provides a comprehensive analysis of the theoretical and contextual factors that influence the ability of latecomer firms to catch up and thrive in the global market. It offers valuable insights into the dynamics of catch-up processes and the specific challenges faced by firms in the Latin American context. The chapter contributes to the existing literature on latecomer firms and provides a solid foundation for further research in this area. The findings of this chapter have implications for policymakers and practitioners seeking to support the growth and development of latecomer firms in Latin America and beyond.

This chapter examines the role of different types of innovation in helping latecomer firms survive and succeed during adverse economic conditions in developing countries, using Argentina’s 1998–2001 economic crisis as a case study. The study draws on latecomer firm theory and firms’ differences in evolutionary theory to investigate the competitive strategies of latecomer firms, focusing not only on product and process innovations but also on nontechnical areas such as organizational innovations. The empirical analysis is based on data from the Second Innovation Survey in Argentina, covering a sample of 1688 manufacturing firms.

The results show that technological innovation, particularly the introduction of product and process innovations, positively impacted firm performance during the economic crisis. Process innovations had a greater impact on total sales and labor productivity compared to product innovations, suggesting that latecomer firms prioritized the sale of cheaper goods through process innovations. The role of non-technological innovations, such as marketing and organizational innovations, had mixed results. Organizational innovations, when measured as inputs or efforts toward organizational change, had a positive impact on firm performance. This suggests that organizational capabilities, such as new business strategies and quality management systems, are important during times of crisis.

The study also highlights the preference for flexibility among firms operating in crisis-ridden countries like Argentina. Organizational innovations were found to have a stronger impact on total sales than on labor productivity, indicating their relevance in improving corporate flexibility and customer-oriented structures.

Overall, the findings suggest that latecomer firms in developing countries can benefit from both technological and non-technological innovations to navigate and succeed during economic crises. The chapter concludes by emphasizing the need for further research and case studies to enhance our understanding of the relationship between innovation and firm performance in developing country contexts.

This chapter discusses the methodology used in conducting case studies of two latecomer firms in Argentina. The purpose of these case studies is to understand why and how these firms were able to survive, grow, and catch up with global competitors during multiple economic crises in the country. The selection of case studies was based on the strategic selection of extreme cases that could provide rich and contrasting results. The two firms selected were TENARIS and IMPSA, both of which are high-tech manufacturing firms that have achieved international success despite the challenging context in Argentina.

The data collection for these case studies involved three main sources of evidence: internal documentation, archival records, and recorded interviews. Internal documentation included annual reports, balance sheets, and financial statements, which provided quantitative data for key performance variables and firm characteristics. Archival records consisted of newspaper articles from 1968 to 2012, which helped corroborate the information from internal documentation. Recorded interviews conducted by third parties were used to gather firsthand information from top-level management.

The analysis of the case studies followed an exploratory approach to examine the evolutionary path of the two firms and identify their major technological achievements and key business milestones. A pattern-matching technique was then used to compare the successful performance of these firms with the unsuccessful performance of other manufacturing firms in Argentina. An explanatory-building approach was used to establish a link between the firms’ performances and the key drivers for catching up explained in the conceptual framework of the study.

The quality of the research process was ensured through four quality tests: construct validity, internal validity, external validity, and reliability. Multiple sources of data were used to mitigate subjective and biased judgments, and analytic tactics were applied to establish meaningful relationships. Statistical generalizations were not possible due to the limited number of case studies, but the aim was to disprove the neoclassical assumption that all firms respond alike to the same incentives.

In conclusion, this chapter provides an overview of the methodology used in conducting case studies of two latecomer firms in Argentina. The selection of extreme cases and the use of multiple sources of evidence contribute to the reliability and validity of the research findings. The analysis of the case studies helps understand the factors that contributed to the success of these firms in catching up with global competitors.

This chapter examines the case of TENARIS, a latecomer firm in Argentina’s capital goods industry, to understand how it managed to catch up and succeed in a challenging and volatile economic environment. The chapter highlights several key factors that contributed to TENARIS’ success.

First, TENARIS adopted a contrarian approach by focusing on export markets and reinvesting profits to expand its production capacity. While other firms sought rents in the protected domestic market, TENARIS strategically positioned itself to access global markets.

Second, TENARIS invested heavily in innovation resources, such as its own research and development laboratory, to upgrade its products and compete in more sophisticated markets. This allowed the firm to overcome the technological gap between Argentina and more advanced economies.

Third, TENARIS expanded its industrial base both nationally and internationally by networking with affiliates and small and medium-sized enterprises. The firm also pursued vertical integration and acquired production facilities abroad, which helped it overcome the adverse macroeconomic conditions in Argentina.

Fourth, TENARIS prioritized long-term organic growth and coherence over short-term speculative diversification. The firm developed a highly professional management team and maintained an entrepreneurial culture, which contributed to its sustained profitability and growth.

Finally, TENARIS differentiated itself from established competitors by focusing on service innovation rather than just product or process innovation. The firm integrated customized products with high-tech services, positioning itself as a leading provider of integrated solutions to the oil and gas industry worldwide.

Overall, this case study demonstrates that a long-term vision, strategic adaptability, innovative and exporting behavior, and an entrepreneurial spirit were key factors in TENARIS’ ability to catch up and succeed in Argentina’s challenging policy regimes. The findings of this study contribute to our understanding of how latecomer firms can overcome disadvantages and achieve catch-up in dynamic and uncertain economic environments.

This chapter examines the case of IMPSA, a latecomer firm in Argentina, and its journey to catch up with global competitors in the renewable energy industry. The chapter discusses IMPSA’s evolutionary path, which involved building corporate coherence, technological modernization, internationalization, diversification attempts, and specialization in renewable energies. IMPSA’s success can be attributed to its ability to adapt to changing market conditions, invest in advanced technologies, and expand its production capacity. The chapter also explores IMPSA’s corporate strategy, technological capabilities, and organizational structure, which have enabled the company to thrive in the capital goods industry and become a leader in hydro- and wind-power generation. Additionally, the chapter highlights the challenges faced by IMPSA due to adverse macroeconomic conditions in Argentina, including frequent policy changes, currency devaluations, and financial difficulties. Despite these challenges, IMPSA adopted a long-term strategic vision and utilized financial leverage to overcome the disadvantages and continue its operations and growth. The chapter concludes by emphasizing the importance of long-term corporate strategy, flexible organizational structure, and coherent core capabilities in enabling a latecomer firm to survive, grow, and catch up. The findings contribute to the understanding of latecomer firms in developing countries and provide insights for policymakers and managers in similar contexts.

This chapter provides a summary of the concluding remarks from the statistical analysis and case studies conducted in this research. The main research question of this study was why and how a latecomer firm facing adverse policy regimes in Argentina might be able to survive, grow, and eventually catch up, while many other firms lagged behind. The statistical analysis showed that innovative firms performed better than non-innovative ones during the economic crisis in Argentina. Process innovations had a greater impact on total sales than product innovations, indicating that latecomer firms prioritized the sale of cheaper goods through process innovations. Organizational innovations had a nonsignificant effect on firm performance, but when measured as inputs or efforts toward organizational change, they positively impacted performance. The case studies of TENARIS and IMPSA further supported these findings and highlighted the importance of long-term vision, strategic adaptability, innovative behavior, and an entrepreneurial spirit in the success of latecomer firms. TENARIS and IMPSA both followed a contrarian path, ignoring prevailing policy regimes and focusing on strategies, structures, and capabilities that allowed them to catch up with global competitors. TENARIS prioritized the sale of cheaper goods through continuous production, while IMPSA focused on small-batch production and technological modernization. Both firms overcame technological backwardness, gained access to global markets, and managed adverse macroeconomic conditions through their corporate strategies. They also maintained corporate coherence and developed specialized capabilities in their respective industries. The findings of this study have theoretical implications for understanding the strategic maneuvering of latecomer firms and the role of governments and institutions in the process of structural transformation. Methodologically, the study suggests the importance of combining quantitative and qualitative approaches to capture the impact of macro variables on firm behavior. The implications for corporate strategy and policy highlight the need for latecomer firms to be proactive and develop innovative strategies to overcome adverse circumstances. Policymakers should consider supporting successful domestic firms that have the potential to succeed in advanced export markets. Overall, this research provides insights into the factors that contribute to the success of latecomer firms in developing countries.