FDI spillovers on Colombian multilatinas: Upgrading capabilities through indirect ties and humbleness

Pla-Barber, José; Villar, Cristina; Mesa Callejas, Ramón Javier; Botella Andreu, Ana Article FDI spillovers on Colombian multilatinas: Upgrading capabilities through indirect ties and humbleness BRQ Business Research Quarterly Provided in Cooperation with: Asociación Científica de Economía y Dirección de Empresas (ACEDE), Madrid Suggested Citation: Pla-Barber, José; Villar, Cristina; Mesa Callejas, Ramón Javier; Botella Andreu, Ana (2025) : FDI spillovers on Colombian multilatinas: Upgrading capabilities through indirect ties and humbleness, BRQ Business Research Quarterly, ISSN 2340-9444, Sage Publishing, London, Vol. 28, Iss. 3, pp. 750-765, https://doi.org/10.1177/23409444241262793 This Version is available at: https://hdl.handle.net/10419/327095 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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Introduction Foreign direct investment (FDI) spillovers play a pivotal role in acting as conduits for transferring advanced management practices, innovative technologies, and superior organizational skills (Meyer & Sinani, 2009; Villar et al., 2020). These spillovers facilitate a dynamic exchange of knowledge and expertise, allowing domestic firms to elevate their operational efficiencies, strategic capabilities, and competitive positioning in global markets (Buckley et al., 2002). Moreover, on a national scale, FDI spillovers are identified as essential avenues for emerging economies to close the development gap with their more advanced counterparts, thus promoting economic growth and facilitating industrial advancement (Castellani et al., 2024; Meyer & Sinani, 2009). Despite the extensive research on the impact of FDI in emerging markets, the focus has predominantly been on Asian economies, particularly China (e.g., Fu, 2012; Gu & Lu, 2011; Kim et al., 2022; Liang, 2017; Liu & Buck, 2007; Zhang et al., 2010). This region’s global economic significance and appeal to multinational corporations have been well documented (Luo & Tung, 2007). However, exploring less examined regions like Latin America can offer alternative insights, given the distinct economic, political, and social landscapes that may influence FDI spillover mechanisms differently than in Asia (Finchelstein et al., 2022). The diversity in economic structures, market openness, regulatory environments, and cultural nuances in Latin American countries suggests that the effects of FDI spillovers could vary significantly, warranting a tailored analysis (Aguilera et al., 2017; Cuervo-Cazurra, 2016; CuervoCazurra et al., 2018; Morris et al., 2023). Building on this premise, our article adopts a qualitative methodology grounded in the concept of “contextualized explanation” (Welch et al., 2020). This approach FDI spillovers on Colombian Multilatinas: Upgrading capabilities through indirect ties and humbleness José Pla-Barber1, Cristina Villar1, Ramón Javier Mesa Callejas2, and Ana Botella Andreu1 Abstract This study examines how Colombian Multilatinas leverage spillovers from foreign direct investments to enhance their capabilities and expand internationally. Employing a qualitative, exploratory multi-case study approach grounded in interorganizational learning theory, we find that indirect ties, through vicarious learning via observation and emulation, are pivotal in facilitating the acquisition of new knowledge. This learning is key for Multilatinas to improve their technological and organizational capabilities locally, thereby strengthening their position in global markets. In addition, our analysis reveals that the challenges inherent to the Colombian context encourage a distinctive internationalization model characterized by humility and collaborative partnerships. These findings offer actionable insights for managers aiming to leverage international spillovers for capability development and global growth. JEL CLASSIFICATION: M16; M21; M14 Keywords Spillovers, channels, ties, vicarious learning, partnering, Multilatinas 1Faculty of Economics, University of Valencia, Valencia, Spain 2Faculty of Economics, University of Antioquia, Medellín, Colombia Corresponding author: José Pla-Barber, Faculty of Economics, University of Valencia, Av. Tarongers, s/n, 46022 Valencia, Spain. Email: [email protected] 1262793BRQ0010.1177/23409444241262793BRQ Business Research QuarterlyPla-Barber et al. research-article2024 Regular Paper Pla-Barber et al. 751 posits that case studies can yield causal explanations that preserve, rather than diminish, the richness of the context (Tsui, 2006). Recognizing the importance of context in shaping theoretical justifications, recent academic work highlights the need to document these spillovers across various settings to invigorate research in international business (Delios, 2017). Through this lens, we explore FDI spillovers in top Colombian Multilatinas, selected due to their superior absorptive capacity relative to domestic firms (Cohen & Levinthal, 1990), a critical determinant for receiving knowledge spillover benefits. By focusing on this context, we aim to elucidate how top-tier firms in a Latin American country leverage their advanced absorptive capacities to capitalize on FDI spillovers, thereby offering insights into the successful transfer and integration of knowledge. Based on an exploratory multiple-case study of 12 Colombian Multilatinas, our research investigates the primary channels through which these firms acquire knowledge from multinational companies. It examines the impact of this learning process on their competitive capabilities, including product technology, organizational processes, and international expansion strategies. In doing so, we unveil the “black box” of spillover effects from a managerial perspective, an area that prior quantitative research has largely overlooked. Our contribution to the literature is twofold. First, conceptually, our qualitative approach enables us to emphasize learning outcomes and discern between two crucial dimensions: the channels or mechanisms facilitating spillovers and the actual effects of these spillovers (Javorcik, 2004). We contend that existing research often conflates these dimensions, primarily due to the limitations of quantitative economic methodologies, which may oversimplify the complex nature of spillovers and their dynamics within firms (Rojec & Knell, 2018). By adopting an inter-organizational perspective, we can shed light on the various channels (e.g., direct and indirect ties) facilitating knowledge transfers among actors and their contribution to spillover outcomes, particularly in generating unique capabilities that enhance competitiveness across local and global markets (Giroud & Scott-Kennel, 2009). Moreover, research examining the impact of FDI on indigenous firms’ international competitiveness beyond productivity or exports, except for some notable examples by (Fu, 2012) and Hernández and Nieto (2016), remains scarce. Our approach extends beyond product innovation to encompass organizational processes and internationalization, offering a comprehensive view of these effects. Consequently, we can observe their real impact, providing a more nuanced understanding compared with studies that rely on proxies to quantify potential effects. Second, on a theoretical level, we enrich the relevant spillover theory by situating it within the Latin American context (Tsui, 2006). Our approach applies existing theory to an underexplored context, identifying potential mismatches between the context and established theory. This process fosters theory-building by recognizing and valuing the significance of contextual disparities. Our study suggests that indirect ties also potentially facilitate learning and bolster competitiveness. This effect is particularly relevant for latecomer emerging-market multinational firms such as Multilatinas, which may lack direct interactions or value-chain linkages with foreign MNEs. Furthermore, the characteristics of the institutional context in Colombia have shaped a leadership style grounded in humility and enduring partnerships. These factors, in turn, influence firms’ connections with foreign MNEs, capacity for capability enhancement at home and abroad, and internationalization processes (Cuervo-Cazurra et al., 2020). The remainder of the article is organized as follows. The next section begins by introducing certain theoretical ideas central to the spillover analysis. Thereafter, we discuss our methodological design, including the frame for the investigation and the data collection. We then analyze our study’s findings and discuss their implications. Finally, we conclude our study and develop suggestions for future research. Conceptual background Interorganizational learning perspective: channels and effects A closer look at the spillover literature reveals the importance of interactions between domestic and foreign firms in generating spillover effects (Perri & Peruffo, 2016; Villar et al., 2020). Studies on inter-organizational learning posit that interactions encompass complex patterns of information exchange, such that knowledge prospects and learning usually depend on the type of connections, the incentives of the partners, and the type of resource being shared (Bruneel et al., 2010; Gulati et al., 2000; Lane & Lubatkin, 1998). Transferring specific resources—for example, know-how—entails a significant tacit dimension, as it requires face-to-face contact and voluntary exposure to experience-based knowledge related to various business practices and problem solutions. As the effects of FDI on domestic firms depend on the resources transferred, many works in the IB field posit that spillovers focus on a transactional, collaborative relationship involving formal and direct contact, that is, alliances or value-chain linkages (Fernhaber & Li, 2013; Giroud & Scott-Kennel, 2009). In these cases, the MNE typically provides training and technical services, and these interactions between partners can upgrade learning in local firms. However, firms can also learn vicariously through observation and emulation (Prashantham & Dhanaraj, 2015). Compared with formal and direct ties, this study stresses the 752 Business Research Quarterly 28(3) role of “indirect ties” as mechanisms for learning through observation. This logic is based on the type of knowledge transfer each tie supports. Relationships and networks are important mechanisms for learning and acquiring experience, but not all ties lead to the same level of knowledge sharing: “. . . direct ties provide resource-sharing and information spillover benefits, but indirect ties provide only the latter” (Ahuja, 2000, p. 448). The basic stance is that indirect ties provide benefits through explicit, observable information exchanged informally through local trade shows, conferences, seminars, and communication with personnel from nearby companies or research centers (Fernhaber & Li, 2013). For firms with limited access to direct ties, indirect ties can provide information that supplements the existing information base. They serve as an effective way for actors to enjoy the benefits of network size without paying network maintenance costs (Ahuja, 2000). It should be noted that although these connections have been assigned a variety of names, such as “ties,” “relationships,” and “linkages,” we use the term “ties,” which is more aligned with the properties of strategic networks as for inter-organizational learning (Ahuja, 2000; McEvily & Zaheer, 1999). Such conceptualization of ties offers insights to revisit the channels and effects in classic spillover studies. A comprehensive economic literature review by Crespo et al. (2009) concluded that FDI spillovers could occur mainly through four major channels: demonstration/imitation, labor mobility, competition, and backward and forward linkages with domestic firms. Among these, the most cited are the imitation effect (local firms copying technologies brought by MNE) and the competition effect (when an MNE’s entry leads to an increase in competition in the host country and local firms need to either use their existing resources more efficiently or search for new technologies) (Villar et al., 2020). However, one persistent problem in this stream of literature is the unclear use of the concepts of “channels” and “spillovers,” which fails to address the difference between the mechanisms or channels through which the spillovers occur and the measurable effects on output. For instance, labor mobility is often considered both a mechanism (Görg & Greenaway, 2004) and a spillover effect (Crespo et al., 2009). In our view, this ambiguous conceptualization is problematic—spillovers should always be indirect owing to their nature; “indirect” or “direct” should refer to the channel or mechanism rather than the spillover itself. This problem reflects that the literature on spillovers is rooted in macro-level aggregate studies from the field of economics, where direct and indirect effects are difficult to separate due to methodological issues (Kokko, 1996). Concerning the effects of these spillovers on firms’ strategic capabilities, little empirical evidence exists on aspects beyond technological dimensions. Many empirical studies provide evidence on the diffusion of superior production-related technologies from foreign MNEs to local partner firms (Kokko, 1996; Liang, 2017). In fact, much of the literature uses the terms “productivity” and “technology” spillover interchangeably (Buckley et al., 2002). However, it has been suggested that spillovers might also take the form of marketing, distribution, human capital, or management skills (Crespo et al., 2009; Fu, 2012). As MNEs often possess stronger assets, they can pave the way for local firms to enter the same export markets by either creating the necessary transport infrastructure or disseminating information on market conditions, such as productdesign and consumer preferences, marketing strategies, or even market access spillovers if they facilitate indigenous firms’ expansion in foreign markets (Buckley et al., 2002; Görg & Greenaway, 2004). By adopting a qualitative approach, we aim to provide evidence on the channels that can lead to different spillovers from competitiveness upgrades in Colombian Multilatinas. Our context: research on Multilatinas Our research context is based on Colombian Multilatinas. Multilatinas are multinationals from Latin America of any size with value-added operations abroad at the productionplant level and with branches, franchises, or any other type of presence in capital-receiving countries (Cuervo-Cazurra, 2008). In recent years, there has been increasing attention in international business research to studying Multilatinas (e.g., Aguilera et al., 2017; Blanco et al., 2023; Hermans & Borda Reyes, 2020; Hermans et al., 2024; Lopez-Morales, 2018). These firms can serve as a laboratory for identifying new issues that studies of firms in other regions have missed or have not analyzed in depth. Compared with other emerging market multinationals, Multilatinas have been considered latecomers in the global market due to a combination of historical, economic, and strategic factors (Cuervo-Cazurra et al., 2020). Historically, Latin American countries have grappled with political instability, economic turmoil, and social challenges, creating an unfavorable environment for international expansion. These nations have also experienced uneven economic development, limiting the resources and experience Multilatinas could draw upon compared with established global players and Asian multinationals (Ramamurti & Singh, 2009). Some Multilatinas were also risk-averse, prioritizing the establishment of a solid domestic presence before venturing into riskier international markets (Velez-Ocampo et al., 2021). Collectively, these factors have contributed to the perception of Multilatinas as latecomers emerging market multinationals. However, as Latin American economies continue to develop and stabilize, Multilatinas will likely play a more significant role in the global business arena, albeit with their unique challenges and opportunities. Among these Multilatinas, Colombian firms have demonstrated remarkable progress in their international presence during the last two decades. During the 1990s, Colombia implemented important structural reforms due Pla-Barber et al. 753 to market liberalization and favorable economic conditions. Moreover, the country began to offer incentives and protection to foreign investors and quickly became an attractive target. In addition, the financial rating of Colombian firms improved, signaling that Colombia was overcoming the stigma of being trapped in historical conflicts, corruption, and drug trafficking (Gonzalez-Perez et al., 2020). The country’s perceived political stability and potential growth led foreign firms to a massive and aggressive process of acquiring many Colombian companies in several key industries for the local economy (food, retailing, energy, financial services, telecommunications, etc.). Consequently, Colombia experienced the highest levels of FDI in its history, becoming one of the top inward FDI destinations in Latin America and an important source of FDI to the region (United Nations Conference on Trade and Development [UNCTAD], 2019). Nowadays, both Colombian companies and society, in general, have managed to overcome the country-of-origin liabilities, and the country now serves as a benchmark in the region (Boston Consulting Group [BCG], 2018). Despite the importance of Colombian Multilatinas, few published research studies exist on this topic. On one hand, most of this research examines these companies’ specific internal attributes (e.g., hierarchical structure, paternalistic leadership styles, loyalty and personal bonds between supervisors and subordinates, and family-owned business) (BCG, 2018). On the other hand, other authors (González Pérez & Velez-Ocampo, 2014; Velez-Ocampo & González Pérez, 2015; Velez-Ocampo et al., 2021) depict the specificities of their process of internationalization based on the prevalence of organic growth, the exploitation of natural markets after consolidating at home and the adaptation to foreign markets. As far as we know, our article is the first to deal with how these Multilatinas have learned from foreign multinationals and how this learning reinforced their capabilities to compete at home and abroad. Methodology We follow a methodological approach trying to reconcile theory and context by generating “contextualized explanations” (Welch et al., 2020). We employ an abductive approach, leveraging existing theory as a source of inspiration to uncover new patterns relevant to our context (Alvesson & Sköldberg, 2017). This methodology is partially deductive, drawing inspiration from theory, and partially inductive, influenced by data. We restricted our case studies to top Colombian multinational companies to control for context and limit the influence of other economic variables. Acquiring a representative sample of Colombian Multilatinas posed a challenge due to the absence of consolidated official databases. To overcome this limitation, we compiled a comprehensive inventory featuring the 50 most prominent Colombian multinational enterprises based on their experience and international sales. Our compilation strategy encompassed two primary criteria. First, we included all Colombian Multilatinas featured in the Multilatinas ranking crafted by America Economica in 2016 (10 companies). This approach was embraced as these firms exhibited the highest degrees of globalization regarding foreign sales, assets, and employees. Second, we completed this list by including the largest Colombian firms in the Dinero magazine ranking in 2017. Given the potential non-multinational status of some companies within this latter group, we turned to secondary sources such as websites, specialized publications, and reports to validate this information. When a company failed to meet the multinational requirements, we proceeded to the next candidate on the list. This curated list of 50 companies ensured that the entities we approached to participate in the study were multinationals with extensive global experience. The top executives of 12 of these Colombian Multilatinas agreed to participate in the study, representing 28% of the Colombian firms inventoried. We informed all participating companies that disclosing their names would enhance the study’s reliability and impact. Remarkably, each company consented to this request without hesitation. These companies belonged to different sectors and had various degrees of international experience, allowing for sample variation. The number of cases in our study fits with Eisenhardt’s (1989) view that 4–10 cases are usually adequate for achieving theoretical saturation in comparative case-study analyses. Data collection We used different data-collection strategies and data sources to ensure construct validity (Gibbert & Ruigrok, 2010). Data collection, which took place in 2017 and 2018, mainly involved structured interviews with the presidents and top managers of the participating companies. We conducted two face-to-face interviews in each company, each lasting between 60 and 120 min. To ensure a better understanding of the firm, we accompanied this data collection with corporate documents, especially annual reports, web pages, and information from press releases. The analysis of this documentation allowed us to triangulate the information, which ultimately contributed to completing and improving the reliability of the study (Gibbert & Ruigrok, 2010). The interviews followed a carefully prepared protocol that included a mixture of specific and open-ended questions. The interviews were initially carried out in Spanish and subsequently translated into English using a methodology akin to that of Blanco et al. (2023). Once the categorization process was finalized and our data structure was established, the fundamental components of the analysis—encompassing categories and quotations—were subjected to a thorough translation into English by a skilled 754 Business Research Quarterly 28(3) translator specialized in the relevant domain. To ensure accuracy and fidelity, a researcher from Colombia, not affiliated with the authoring team, conducted a back translation, revealing a lack of discrepancies or divergences in the examined translated material. Fourteen interviews were conducted with the organizations’ presidents, while the remainder were conducted with top executives, such as vice presidents, CEOs, and international business managers. Some notes were taken during the interviews, and all interviews were recorded and transcribed. We took care to avoid influencing respondents’ answers by sharing our knowledge and understanding of the literature on the topic. In the final step, we summarized all the information in the form of case reports, extensively using citations from the interviews and documents to ensure a high level of accuracy (Langley, 1999). Each report was sent to each interviewee for factual verification in the second interview, and interviewees were asked to comment on or add to the reports. Table 1 provides general information on the participating firms, details on the respondents’ positions, and information on the date and duration of the interviews. Data analysis strategy We developed strategies for data analysis from both primary and secondary sources, and we emphasized using tables and diagrams to present, record, organize, and manage data in an accessible and attractive way. Furthermore, the data collected in the interviews were translated into categories to make comparisons and possible contrasts so that data could be organized conceptually and display the information according to some pattern or emergent regularity (Strauss & Corbin, 2008). This process also facilitated the synthesis of the empirical findings and their relationships with the theoretical concepts in the literature (Gioia et al., 2013). We carried out an iterative process of abstraction through which we moved from the experience of managers as stated in their own words (first-order codes) to theory elaboration through second-order themes and aggregate dimensions (Magnani & Gioia, 2023). This process allows us to move from data toward theory and from reality toward abstraction. First, each researcher independently read through the entire dataset and created an initial set of first-order codes. All differences in codes and coding rules were discussed until a consensus was reached. These first-order codes represent the companies’ realities and managers’ experiences related to foreign multinationals’ influence on their strategic capabilities. Second, we grouped the first-order codes into five second-order themes that were relevant to our research objective. These concepts were more abstract and represented the theoretical dimensions that helped simplify the information in the codes: direct ties, indirect ties, innovation and technology, organizational processes, and internationalization. Third, we arrived at the second level of abstraction by aggregating the second-order themes into the more general concepts: (1) the channels through which spillovers occurred and (2) the spillover effects. This broad scope allows us to observe types of spillovers that cannot be detected when adopting the quantitative perspective commonly seen in the literature. Figure 1 presents the progression from raw data to theoretical themes and concepts, forming the framework for our discussion. Findings and discussion Channels: direct versus indirect ties The relationships established between domestic and foreign firms deserve special attention in attempts to identify the effects of FDI spillovers on local firms (Giroud, 2012; Javorcik, 2008). In this regard, the surveyed firms emphasized two relational channels for knowledge transfer: direct and indirect ties. Direct ties. Direct ties facilitate the transfer of know-how, which requires face-to-face contact in that it encompasses an important tacit component (Kogut & Zander, 1992). While multinationals have a strong incentive to prevent knowledge leakage to their competitors, they may want to transfer expertise and know-how to their partners (Javorcik, 2008). Therefore, the direct tie dimension included statements referring to relations with suppliers, customers, shareholders, staff, and other actors that led to the sharing of resources and know-how. Some of these ties were based on supply chains or alliances (Jindra et al., 2009). Other interesting cases arose when respondents referred to the know-how provided by other internal groups, such as foreign shareholders and partners or staff members previously employed by other multinationals. Three out of the 12 companies mention the importance of learning through alliances. For example, the President of Nutresa, which has signed two equity joint ventures with the Mitsubishi group in Malaysia, a coffee producer (Dan Kaffe), and a distributor (Oriental Coffee Alliance SDN),1 indicated: We are a limited company with approximately 14,000 shareholders. Seven per cent of our shareholders are not Colombian—they are shareholders from other countries who have questions and recommendations, and we learn from them. . . . Moreover, our group has signed strategic alliances with leading companies, such as Mitsubishi. . . . This allows for other forms of learning through alliances, as in cases with equity participation. . . . Competition and alliances are the primary sources of learning from the multinationals with which we compete. (Nutresa Group, President) A parallel case is that of the Familia group. On its Board of Directors, the Group has had its partner, the Swedish multinational company SCA, since 1985, when Familia became one of the first Colombian firms to partner with an Pla-Barber et al. 755 Table 1. Profile of companies surveyed and summary of interviews. Company Sector Type City of origin Year of creation Employees (2018) Operating income (mil €, 2018) Year of first FDI Number of foreign countries Main foreign countries Interviewee Date of interview Length of interview (min) Argos Group Construction Private Medellín 1934 14,000 3,817.184 2005 18 Ecuador, Honduras, Panama, Dominican Republic, Puerto Rico, Venezuela, USA President November 2, 2017 December 21, 2017 60 60 Colceramica Construction Private Bogotá 1950 15,000 290.673 1994 50 Mexico, Panama, Guatemala, USA CEO September 28, 2017 June 6, 2018 100 60 Empresa de Energía de Bogotá Energy Public Bogotá 1896 600 1,088.799 2002 3 Perú, Guatemala, Brazil President June 7, 2018 September 25, 2018 120 60 EPM Group Public services Public Medellín 1955 7,300 4,350.538 2010 3 Mexico, Guatemala, El Salvador Strategy Vice President November 4, 2017 December 21, 2017 60 70 Familia Group Paper-related products Private Medellín 1958 3,500 466.782 2006 20 Argentina, Bolivia, Chile, Ecuador, Perú, Puerto Rico, Dominican Republic Strategy Vice President November 9, 2017 December 22. 2017 110 80 ISA Energy Public Medellín 1967 3,900 1,930.536 2001 7 Perú, Brazil, Chile, USA President November 22, 2017 March 31, 2018 120 60 Nutresa Group Food and beverage Private Sonsón 1920 32,000 2,408.682 1995 14 Chile, Perú, Ecuador, Panama, Guatemala, México, USA President September 14, 2017 March 30, 2018 100 70 Orbis Group Chemical products Private Medellín 1921 5,000 394.699 1994 16 Mexico, Ecuador, Venezuela, Costa Rica, Panama President November 2, 2017 March 31, 2018 110 60 Postobón Food and beverage Private Medellín 1904 12,000 466.782 1967 19 Costa Rica, Mexico, Canada, Spain, Netherlands, Germany International Division Manager March 31, 2018 June 7, 2018 100 80 Procafecol Food and beverage Private Bogotá 2002 1,790 81.071 2005 13 Chile, Costa Rica, Panama, Ecuador, Bolivia, Peru, Paraguay, Spain, USA President December 13, 2017 June 6, 2018 115 60 Sura Group Finance and insurance Private Medellín 1944 59,000 3,361.095 2011 9 México, Chile, Dominican Republic, Panamá, Argentina, Uruguay, Brazil President October 14, 2017 December 21, 2017 60 60 Totto Textile and clothing Private Bogotá 1987 7,000 124.641 1992 35 Mexico, Guatemala, Costa Rica, Bolivia, Chile, Ecuador, Peru, Spain, UK International Division Manager April 28, 2018 June 6, 2018 120 60 Source: Own elaboration based on information obtained from the interviewee and companies’ institutional reports and web pages. Operating income (turnover) was retrieved from the Orbis database (Bureau van Dijk, accessed February 2020). 756 Business Research Quarterly 28(3) international industrial group.2 The vice-president of Familia remarked: Multinationals can enter Colombia very easily, so we compete with the largest multinationals in the world: Procter and Gamble, Kimberly Clark, Johnson and Johnson, and CMPC. These companies present alternatives, innovations, and proposals . . . on products, communication, packaging, and market introductions. Therefore, we must leave the market if we do not follow the same path. We are not their suppliers, and the Board, especially our foreign partners, has forced us to take these steps. (Familia Group, Vice President) In similar terms, the President of Empresa de Energía de Bogota (EEB) stated: In 1997, our company was state-owned, and we were experiencing a major crisis. At that time, it was decided to privatize part of it. Endesa, the Spanish electricity multinational, entered the capital of our subsidiaries Emgesa and Codensa, with a 48.5% stake. This alliance provided important learnings, especially in the managerial and financial aspects. Moreover, we learned how to manage strategic alliances with foreign partners and to think of internationalization as a strategic option for our company. We have taken advantage of all this learning later in the expansion of our group. (EEB, President) In fact, EEB recently signed a new agreement with the Spanish multinational Red Eléctrica to enter Brazil by purchasing the Brazilian company Argo Energia, one of the country’s most consolidated companies.3 Indirect ties. Because not all firms can be part of the network to access the resource sharing arising from interaction with MNEs (know-how, human capital, etc.), indirect ties play a relevant role in disseminating the benefits of FDI to a broader pool of domestic firms. Indirect connections offer accessible opportunities in the form of explicit information that can be shared in situations other than business partnerships. For example, as proposed in the literature, the competition effect among domestic and multinational firms can indirectly induce local firms to improve updating production technologies and techniques to become more productive (Görg & Greenaway, 2004). In addition, the imitation effect occurs if there are indirect relationships between MNEs and local firms, and domestic firms learn superior production technologies and other knowledge from MNEs (Rojec & Knell, 2018). For example, attendance at trade fairs has been mentioned as an important way to create shared knowledge and solutions. Other settings, such as information fora, industry associations, and systematic follow-up interactions, were also highlighted as opportunities to be attentive to other firms’ strategies (Greenaway et al., 2004). This type of tie does not entail formal resource-sharing benefits but can provide access to information, knowledge, and experience from other actors (Ahuja, 2000). Foreign firms increase local competition by infusing new technologies into the domestic market. These pressures indirectly force domestic firms to speed up new technology adoption and increase their managerial efforts to Spillover effects Channels Direct ties Indirect ties Product innovation and technology Internationalization Statements about improvements in coordination, organizational processes and business models: MNEs and large, robust companies usually develop models that allow them to optimize resources, such as corporate structures of good governance, social responsibility programs aligned with the business model. All this type of factors that take place at global level generate a learning for us (Postobón, International Business Manager) Statements about improvements in product innovation and technology: understand the direction in which the industry is moving, to make decisions regarding updates and to adjust , CEO) Statements about knowledge transfer from observation, meetings in industry fora, trade fairs, etc.: do (Orbis Group, President) Statements about improvements in foreign market knowledge and readiness to expand abroad: We try to avoid this mistakethat big multinationals make when they acquire companies. We are humble and try to integrate the local cultures and processes into the culture of Nutresa, respecting the local teams and the local brands Statements about knowledge transfer from business partners, foreign board members, employees, etc.: member of the Group in Malaysia) - lows for other forms of , President) Organizational processes Figure 1. Data structure. Pla-Barber et al. 757 improve efficiency under this adverse scenario (Crespo et al., 2009). This seems the case with the arrival of Starbucks and competitors in the coffee business, such as Dunkin Donuts or Krispy Kreme in Colombia. The President of Procafecol (owner of the Juan Valdez brand, the leading domestic company in the coffee sector) declared in a press interview that new players had not affected them but, on the contrary, had forced them to improve standards: “The entrance of new competitors of the relevance of a Starbucks has forced us to be better. They have forced us to improve standards, to be more flexible and innovate faster.”4 In our interview, he also stressed the importance of observing competitors’ practices, products, and processes, a type of information provided by indirect connections: When we travel, we analyze the iconic stores of Starbucks, observe their development, and examine where their market is going . . . our employees visit such stores, take notes and photos. Intelligence about the competition is gathered in any country. We study their best practices and their consumers’ preferences with great discipline. (Procafecol, President) In the same vein, the President of Nutresa Group also remarked on the importance of these indirect ties: Our multinational competitors, such as Nestle or Unilever, were the main source of learning . . . our company now goes to other countries as a multinational, and the companies of that country look at our company in such a way that they start to imitate it. (Nutresa Group, President) Indirect learning based on observations is often facilitated by attending trade fairs or association meetings. As the Totto International Business Manager mentioned, “Much learning occurs at international fairs, where you can see what the competitors are doing.” The ISA Group President stated, “Through fairs and participation in business associations, we have seen new product trends, design . . .” Most of the interviewees remarked on this issue: At the point of sale, in travel and at fairs, one can understand new developments and tendencies without direct communication with our competitors. The innovation comes to us—often, the suppliers inform us about new possibilities in machinery or raw materials . . . Fairs, points of sale, and trips are different options through which the market allows for information transfer, but not in a direct way. (Familia Group, Vice President) We attend international fairs to see what is being developed. Apart from attending them to sell, we go to know what to anticipate. (Postobón, International Business Manager) Indirect learning can also result from other business meetings facilitated by guilds and inter-industry events. The President of Argos Group, a company that was included in the Dow Jones Sustainability Index (DJSI) as the second most sustainable cement company in the world in 2018,5 referred to this point: Argos Group is part of international organizations, such as the International Sustainability Forum, in which 200 companies worldwide participate and present best practices on sustainability, alternative fuels, renewable energies, and other aspects. In those spaces, you share experiences with large multinationals from different sectors, such as Unilever, CocaCola, IBM, and Monsanto. In this sense, these types of fora are essential for transferring and exchanging best practices . . . They are not arenas for competition but focused on the general interest of the organizations, sustainability, social responsibility, and corporate governance . . . For instance, when you join a team created by a sustainable development organization, you can access the efforts of many companies from different sectors. (Argos Group, President) In sum, the 12 companies mentioned that indirect channels provide valuable information and provide access to new knowledge of all dimensions. As such, they constitute a useful instrument that provides firms with better information on their potential. Contextualized explanation: indirect ties as conduits for information in Multilatinas. Our research extends the theory of inter-organizational learning to address the unique challenges and opportunities Multilatinas faces. We begin by underscoring the pivotal yet often underappreciated role of indirect ties as channels for information flow, significantly influencing a firm’s strategic decisions. While previous studies have noted the importance of direct and vertical interactions in enhancing capabilities (Jindra et al., 2009), there has been limited investigation into how these dynamics may vary across different contexts. The smaller technological gap between local and foreign firms in advanced economies facilitates direct collaborations (Giroud & Scott-Kennel, 2009; Zhang et al., 2010). However, the scenario is markedly different in Latin America. Multilatinas often struggle to form partnerships with established MNCs due to their nascent technological and managerial capabilities. This challenge is exacerbated by their status as latecomers to the global market, necessitating significant investment in knowledge acquisition and capacity building to reach international standards. 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