Lessons learned from unsuccessful internationalization attempts : example of multinational retailers in Chile

Many retailers are expanding to foreign markets, but not all internationalization attempts are successful. This study utilizes an institutional perspective to examine unsuccessful internationalization efforts. According to this approach, retailers are more likely to succeed when they adapt their retail formats to the norms of the local market and achieve legitimacy from the relevant social actors. Four cases of unsuccessful retail internationalization to the Chilean market by Home Depot, Royal Ahold, Carrefour, and J.C. Penney, were examined. Based on expert and consumer interviews, findings show that these retail firms defied local institutional pressures from consumers, suppliers, competitors, retail executives, and the business community. Management executives of these firms did not embed themselves in the broader social network. It was also apparent the competition had anticipated and responded to their sources of competitive advantage. Finally, their scale was not big enough to command any advantages in the supply chain network.