Managing formal institutional challenges when entering Cuba

Abstract

PurposeThe purpose of this paper is to analyze the formal political, legal and economic institutional legitimacy challenges for (US-based) multinational corporations (MNCs) attempting to enter the Cuban market, discuss the key local constituencies in Cuba that are able to grant legitimacy and sketch out respective strategies to deal with each of these formal institutional challenges.Design/methodology/approachA qualitative research approach comprising semi-structured executive interviews was used, combined with the analysis of media accounts and recent governmental policies and developments. The authors interpreted the gathered data and information based on institutional theory.FindingsThis paper sketches out specific legitimacy challenges for (US-based) MNCs when entering Cuba and discusses strategies to manage these challenges.Research limitations/implicationsThe authors provide an application of institutional theory in the specific context of Cuba and so demonstrate the value of applying this theoretical lens to better understand the local legitimacy processes in this particular emerging market environment.Practical implicationsThis study presents a framework of strategies (US-based) MNCs may use to inform their entry strategies into the Cuban market, based on an analysis of the local institutional environment, legitimacy pressures and constituencies able to grant or withdraw the approval and support of foreign MNCs.Originality/valueThis paper is an original application of institutional theory to the emerging market of Cuba using a qualitative research approach, and so contributes to an emerging stream of research studying this market context from an academic and practical perspective.