The stresses of retail internationalization: lessons from Royal Ahold's experience in Latin America

Abstract

Written prior to the financial crisis of the world's third largest retailer following its announcement of accounting irregularities on 24 February 2003, this paper uses a case study of Ahold's struggles to manage significant investment in the unpredictable business environments of Latin America to focus attention on the stresses internationalization poses for the retail firm. It offers a picture of retail multinationals facing distinctive organizational challenges as they seek to transpose internal and inter-firm practices to markedly different institutional environments, and of a highly contested retail internationalization process - not least by the suppliers of finance. It concludes by drawing out five lessons for retail internationalization theory from Ahold's experiences. A postscript then summarizes the events following Ahold's revelation of significant accounting irregularities through to the announcement of its decision on 3 April 2003 to withdraw from South America. That postscript assesses what further insights the corporate scandal has revealed about Ahold's management of its significant investment in the region.