1. ¹Sonoco International Business Department, Moore School of Business, University of South Carolina, Columbia, USA
2. ²Department of Management, Baruch College, City University of New York, New York, USA

Correspondence: A Cuervo-Cazurra, Sonoco International Business Department, Moore School of Business, University of South Carolina, 1705 College Street, Columbia, SC 29208, USA. Tel: +1 803 777 0314; Fax: +1 803 777 3609; E-mail: acuervo@moore.sc.edu

Received 20 August 2003; Revised 28 November 2007; Accepted 28 December 2007; Published online 24 April 2008.

Abstract

We analyze the advantages and disadvantages of developing-country multinational enterprises (MNEs) in comparison with developed-country MNEs. Developing-country MNEs tend to be less competitive than their developed-country counterparts, partly because they suffer the disadvantage of operating in home countries with underdeveloped institutions. We argue that this disadvantage can become an advantage when both types of MNE operate in countries with "difficult" governance conditions, because developing-country MNEs are used to operating in such conditions. The empirical analysis shows that, although developing-country MNEs rarely appear among the largest MNEs in the world, they are more prevalent among the largest foreign firms in the least developed countries (LDCs), especially in LDCs with poorer regulatory quality and lower control of corruption.