The role of the State in Transnational Exchange: an inter-group contracting. Perspective on Brazilian MNEs' expansion into Mozambique

Abstract

This paper identifies institutional voids in cross-border exchanges and explores potential responses from the state and transnational firms. Using a longitudinal case study of several Brazilian transnational firms’ expansion into Mozambique from 1998 to 2012, it investigates how the states of Brazil and Mozambique, through the highest official channels, i.e. Presidential meetings, forge cordial inter-state relationship to serve as relational governance for transnational firms, which attenuates the problem of institutional voids at the inter-national level as well as the voids in the host and home country. The case also reveals that those transitional firms have facilitated the governance formation by conducting non-market strategies. The paper contributes to literatures of institutional voids, the role of the state and also international business.