International trajectories of Brazilian companies: Empirical contribution to the debate on the importance of distance

Abstract

Purpose – It has been argued in the international business literature that companies begin their internationalization trajectories by entering countries that are geographically and psychically closest to the country in which their home market is located before entering more distant ones. This paper aims to verify whether this assertion is correct for Brazilian companies. If it is correct, the companies would be expected to begin their international expansion in countries within the Latin America region. Not only is this region closest in geographical distance, but also it is most similar to Brazil in many other important dimensions. Design/methodology/approach – This paper is an exploratory and quantitative research undertaken with a sample of 109 national capital companies selected from the 1,000 largest Brazilian companies in 2001 net revenues. Findings – Empirical findings indicate that countries in Latin America have been most frequently chosen by Brazilian companies for their first expansions into international markets. Nevertheless, some companies choose divergent trajectories, initially entering markets that are geographically and psychically more distant. Those companies enjoyed structural features of certain sectors (commodities or global sectors), in which the importance of psychic distance is smaller in the face of economic transactions. Research limitations/implications – An important limitation of this paper is the impossibility to test the hypotheses in specific countries or markets. The authors are forced to analyze the psychic distance effect among regions, with the risk of not accounting for important intraregional differences. Originality/value – The data presented in this paper have clarified some patterns and trajectories of Brazilian companies in international markets. © 2010, Emerald Group Publishing Limited