Show details for "Structural Change, Multinational Corporations and Collective Action Problems in the Tequila Industry"
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Structural Change, Multinational Corporations and Collective Action Problems in the Tequila Industry| Working Group | Transnational Corporations and Development
| | Abstract | Over the last seventy-five years, the tequila industry has been suffering major socio-economic and institutional pressures. Local production was continuously improved and the main relations in the industry were driven by the upstream and downstream conditions in the industry. Upstream relations reduce transaction costs were mainly embedded into social networks (based on trust and family-oriented) and downstream relations increase transaction costs (financial oriented). Local companies are embedded in a network of family ties ensuring the stability of the professional relationships.
“Clusters are geographical concentrations of firms involved in the same, similar, or related activities, which may, but need not, co-operate with one another” (Visser, 2004; Tallman et al., 2004). The potential for social embeddedness (Granovetter, 1985) to lower transaction costs through developing trust among colocalized firms was applied previously to industrial districts (Maskell, 2001). Storper (1993, 1995, 1997) addressed this idea of socially driven exchanges with his construct of untraded interdependencies (based on shared knowledge).
Pressures for change include the instability in the supply of raw materials (agave) – and the need for the stabilization of quality of the final production - and the increasing presence of foreign investors, which bring knowledge, financial support, and access to international distribution networks. The tequila industry was traditionally an export-oriented industry. However, the entrance of foreign investors in the ownership of local firms facilitated internal expansion of the tequila business. Contrary to other beverage industries (e.g. wine, beer and other spirits) joint-ventures in the industry are less important. Foreign investors privilege stakeholdings in the ownership of local firms. We argue that these strategies ensure foreign firms a direct control over the tequila production and distribution, transferring the strategic decision-making processes abroad.
The literature in emerging markets (Latin America) has shown that clustering helps local firms to overcome growth constraints and compete in distant markets (see for e.g. Giuliani et al., 2003; Rabellotti, 1999). This paper analyses the competitive challenges of the tequila cluster by addressing the questions raised by the governance structures derived of the embedding structures and actors and the specificity of inter-relationships among the actors. The analysis will help us to better understand the current challenges and how the governance in the cluster operates by dealing with local embeddness and international pressures for competitiveness.
We recognize the importance and explain the role played by MNCs (upstream and downstream relations, sources of knowledge, dependency…), and the emerging of collective action problems in the industry. Proposals to minimize collective action problems are suggested.
The fieldwork was conducted during summer 2003. Interviews were conducted with members of the leading companies in the Mexican Jalisco state, the National Chamber of Tequila, with local representatives of the Ministry of Agriculture and the Regulatory Council of the tequila industry.
Key words: tequila, Mexico, multinational corporations, clusters, collective action problems. | | Name of Author | Alfredo | | Surname of Author | Coelho | | Institute | CUCEA - Universidad de Guadalajara | | Street | Periférico norte y Parres Arias 799, Belenes, módulo B, segundo nivel - Jalisco, | | Country | Mexico | | Telephone | 37703404 | | Email | victorm(AT)cucea.udg.mx |
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