The purpose of this paper is to investigate the suitability of the socialist petro-state of Venezuela for economic expansion. It may initially seem that the turmoil in Venezuela would indicate that it should not be used for business expansion. However, by adopting an approach that allows the company to minimize the impact of economic and political instability and leverage the low wage demands of Venezuelan workers, this endeavor has the potential to be popular. Should Venezuela recover from its present crisis, companies that invested during the crisis will be well-situated to reap the benefits.

Fundamentally, Venezuela is a socialist economy (Buxton, 2018). However, this does not mean that all private businesses are abolished. Rather, private businesses in some of Venezuela’s major industries are at risk of being transferred to public ownership, depending on how well they compensate their employees and whether the laborers are satisfied with the status quo. More importantly, software consulting is not an industry at risk of nationalization. There have been no efforts or measures put in place by Maduro to strictly control the software consulting industry. Even the comparatively high minimum wage that the Venezuelan government requires is not likely to be a challenge because it would still be lower than the prevailing wage for software consultants.

One consideration, though, is that locally-developed assets (for instance, any physical capital installed in an office center, like servers or computer terminals) might be subject to seizure if the business wished to drop out of the Venezuelan market. Similarly, assets stored domestically might at some point be subject to seizure, so it is important to store only essential operating capital in Venezuelan accounts and transfer (and convert) the rest of the income from Venezuelan operations as soon as practicable.

Because Venezuela is a semi-socialist state, it has very robust labor protections (Di John, 2014). Employees in Venezuela have an absolute right to unionize. Employees in key industries (petroleum, mining, and so on) have further protections, for instance the right to petition for nationalization of the factory they work in, but this will not be relevant for software consulting. A key problem for workers in this country is not the right to healthcare—the right to healthcare is guaranteed by Venezuelan law—but rather access to healthcare. A major problem in many areas is that there is not enough medicine to go around.

This might not be problematic, except that a consequence of the Venezuelan system is that any medicine imported from abroad (for instance, for our staff) would be confiscated and distributed rather than allowed to remain in our possession. Also, there is a right to be fed by the government, when food is available—but in many areas, food is not available (and, again, hoarding food would cause severe bad consequences for the company). Location decisions need to be made with this in mind.

The most concerning aspect of Venezuela’s current situation is that it is very politically unstable (Mavrokordatos & Stascinsky, 2015). Maduro, the president, has essentially outlawed the opposition parties, and the opposition parties for their part have turned to violence as a form of protest against the unavailability of food and medicine. As a result of Venezuela’s lack of functioning democratic institutions, it is impossible to predict with any degree of confidence what will happen next. It is possible, but not likely, that Maduro’s successor (or Maduro himself) will soon double down on the country’s socialist policies, nationalizing more industries as a way of attempting to consolidate government power. This is a serious risk for our business. It is also possible, and substantially more likely, that Maduro’s successor will embark on a gradual program of privatization, returning to private industry sectors that had previously been controlled directly by the government. This is very likely to usher in a new period of prosperity for Venezuela, in which case this business would stand to benefit enormously from the increased demand for its services.

Based on the above, a decentralized organizational strategy is essential for this new venture. One of the characteristics of operating in a chaotic social and political context is that operations are subject to disruption more or less at random. It is necessary that the organization as a whole be able to continue operating even if misfortune should befall any particular leader—in order to accomplish this, it is necessary to use a decentralized (and thus resilient) approach instead of a centralized one. If a centralized approach were used, a stroke of bad luck could result in the organization being completely unable to operate. For instance, if the organization’s local leader were arrested, harmed by the rioting, or otherwise prevented from working, the organization would be handicapped.

Also based on the factors discussed above, a polycentric approach to hiring is essential. There are several reasons. The first is that hiring from other countries will almost certainly be impossible anyway, because few people want to go to Venezuela. The second reason is that the Venezuelan government is more likely to be hostile to a business operated primarily by non-Venezuelans than by one that gives jobs to local workers. The third, and most important reason, is that locals are going to be experienced with navigating the political, social, and economic chaos of life in Venezuela. This knowledge is invaluable; they will be able to take care of themselves and also will be able to provide advice and guidance to non-Venezuelan leadership who have no choice but to come to Venezuela.