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This study explores the motivations underpinning the foreign direct investment
(FDI) activities, including location and entry mode decisions, of nascent multinational
enterprises (MNEs) from West Africa.
!"#$ %& ' ( !)#*
*+& This research adopted a case study approach entailing the
triangulation of interview data with documentary evidence on two leading West African
financial service companies that have FDI footprints in over 50 country markets.
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"' "! , Evidence suggests the primacy of market'seeking motivations in explaining the
FDI activities of the explored nascent MNEs, with relationship, efficiency and mission'driven
motivations emerging as strong sub'themes. Having neither the global resonance of their
traditional counterparts nor the government'augmented resource profile of their Asian
counterparts, the study firms appear to have shied away from costly strategic asset and
prestige'seeking FDI, and preferred psychically and institutionally proximate sub'Saharan
African markets and non'organic collaborative entry modes.
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The above insights should be considered tentative
given the study’s limited evidence base. This underscores the need for a larger scale
empirical effort to assess the propositional inventory outlined at the end of this paper.
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*+% +*( $ ( +*% " , Africa’s growing population of MNEs are urged to continue to
strengthen their positions across African markets, view these regional markets as a platform
to learn and upgrade their capabilities for future expansion into more challenging global
markets, and to augment their limited resource profiles, including by tapping into their global
diaspora networks. Policy makers should support their market'seeking initiatives given
evidence that they could be a pathway to higher order FDI motivations. This evolutionary
approach reflects enduring lessons from earlier generations of MNEs. Policy makers should
also support continuing intra'African investment flows as a pathway to creating more
sizeable, integrated African markets and generating positive spill'overs, including in typically
blind'sided post'conflict or fragile African markets. This also entails pushing for cross'border
regulation needed to minimise the transfer of systemic risks across countries.
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! "*( %)#-*(
The study provides rare empirical evidence on hitherto neglected MNEs
from sub'Saharan Africa, thus extending the geographic compass of research on FDI
motivations. It identifies some distinctive aspects of the explored MNEs’ FDI behaviour,
including the previously unheralded mission'driven motivation, whilst also revealing shared
characteristics with traditional MNEs and EMNEs.
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. ) / ' FDI, Multinational Enterprises, Motivations, MNEs, EMNEs, Africa.
*
%)
Research paper
International Marketing Review
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Although international business researchers and policy actors have extensively engaged with
emerging market multinational enterprises (EMNEs) (Gammeltoft, Pradhan and Goldstein,
2010; Wang et al., 2012; Yang et al., 2014; Chimanade and Rebelloti, 2015), very little
systematic research attention appears to have been paid to nascent multinationals from sub'
Saharan Africa, outside of the industrialised South Africa. This is largely understandable
given the overwhelming dominance of the BRICS and other frontier economies in South'
South, South'North FDI flows (Goldman Sachs, 2005; Sauvant, 2005). However, this
dominance does not excuse the neglect, in mainstream international business research, of the
recent sustained boost in Africa’s outward foreign direct investments (OFDI) (UNCTAD,
2015).
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Although still a fringe contributor to global OFDI flows, Africa’s overall OFDI stock has
grown several folds in recent years, from USD38.9 billion in 2000 to USD213.5 billion in
2014. The figures for 2012 and 2013 were USD12.37 and USD15.95 billion respectively, and
despite recent downturn in global commodities’ prices, Africa’s OFDI still reached
USD13.07 billion in 2014 (UNCTAD, 2015). A few additional facts deserve noting: ten
African Transnational Corporations (TNCs) were ranked among the top 100 non'financial
TNCs from emerging and frontier economies in 2013 – a slight update on the forty African
Challengers previously identified by Boston Consulting Group (BCG, 2010). African
companies, therefore, appear to be joining their counterparts from other emerging regions in
pursuing their growth ambitions through OFDI (Ibeh, 2009). South Africa, not surprisingly,
accounts for a significant proportion of Africa’s OFDI flows (about 60 per cent of the total
OFDI stock in 2014 or six of the ten non'financial TNCs referred to above) (Verhoef, 2016).
The more interesting narrative, however, is that new foreign direct investors are emerging
from an increasing number of African countries, including Nigeria, Angola, Egypt, Morocco,
and Algeria. Nigeria, for example, averaged over 10 per cent of Africa’s OFDI flow in the
2012'2014 period (USD1.54 billion, USD1.29 billion, USD1.61 billion respectively).
Angola’s OFDI outlay for the same period ' USD2.74 billion, USD6.04 billion, USD2.13
billion respectively ' was even more remarkable. Mauritius, Botswana, Cameroun, Togo,
Congo Democratic Republic, Gabon and Zambia have also recently boosted their modest
OFDI stock (UNCTAD, 2015).
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The aim of this paper is to improve understanding of the motivations for undertaking FDI
activity and making location and entry mode decisions among nascent multinational
enterprises (MNEs) from Africa. An ancillary objective is to examine how these motivations
might differ from those of their counterparts from the emerging markets and more advanced
economies. The present study’s focus is justified on a number of grounds. First, it reflects
recent calls in the literature for another look at classic FDI motivations in view of the
increasing complexity of international operations and global value chains in our multipolar
world (Giroud and Mirza 2015; Pananond, 2015). Second, it responds to calls for greater
understanding of the behaviour of emerging market multinationals (EMNEs) (Gammeltoft,
Prahdan and Goldstein, 2010), including Africa’s nascent MNEs (Ibeh, 2009). Third, the
present study’s African context offers a different and additionally important platform to
assess the view advanced by several EMNEs researchers (e.g. Matthews, 2002; Kedia et al.
2012) that the unique characteristics of emerging markets may cause these newer
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multinationals to have internationalisation motivations different from those of traditional
MNEs.
The remainder of this paper is organised as follows. Section two presents a review of the
literature pertaining to the focal issues raised by the present study and outlines relevant
research questions. The case study approach adopted for this study is next explicated. This is
followed by the presentation, analysis and discussion of the study evidence. The final section
summarises the findings and discusses managerial, policy and future research implications. A
propositional inventory is advanced to guide future research.
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Theoretical explanations regarding how and why firms undertake FDI activities have long
engaged the attention of international business economists. Hymer’s influential view,
severally reinforced by others (Aliber, 1970; Caves, 1971), was that FDI decisions are driven
mainly by firms’ resolve to gain optimally from their quasi'monopolistic advantages over
indigenous competitors in host or foreign markets. This notion, which shares broad
conceptual resonance with the resource (Penrose, 1959; Barney, 1991) and knowledge'based
(Kogut and Zander, 1992; Grant, 1996) views, suggests that such quasi'monopolistic
advantages must be sufficiently significant to compensate for the indigenous players’ home
advantages and the investing firms’
(Dunning, 1977). Transaction cost
/ internalisation theorists, notably Buckley and Casson (1976) extended this perspective, by
identifying additional conditions under which direct investments are preferable to using
external parties in foreign markets. Their conclusion is that by internalizing the international
transfer of a firm’s assets and capabilities through hierarchical (FDI) modes rather than
market mechanisms, firms are better able to exploit their quasi'monopolistic advantage(s) in
foreign markets, with fewer transfer problems (Buckley and Casson, 1976; Rugman, 1985;
Verbeke and Kano, 2015).
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Dunning’s (1981) eclectic paradigm highlighted the additionally critical role of locational
factors in influencing FDI behaviour and argued that three sets of advantages (ownership'
specific advantages, location'specific advantages, and internalisation [OLI] advantages),
holistically considered, underpin much of firms’ FDI behaviour. Subsequent work refined the
OLI framework to accommodate relationship and network advantages (Dunning, 1993) and
further acknowledged that latecomer firms might possess certain unique attributes, different
from the traditional, firm specific O'advantages (Dunning, 2006); these include country'
specific advantages (Dunning et al., 2008), institutions (Dunning and Lundan, 2008) and
government support (Kalotay and Sulstarova, 2008; Ramamurti, 2008). These latter sources
of competitive advantage are preponderantly attributed to EMNEs (Amighini et al., 2010)
who, relative to their counterparts from advanced economies, do not often have avant'garde
technologies, global brands, and extensive international experience (Ramamurti, 2012). For
example, government support in the form of privileged loans, incentives, and favourable tax
regimes (Child and Rodrigues, 2005; Buckley et al., 2007; Athreye and Kapur, 2009) has
been highlighted as influential in the rise of Chinese MNEs and State'owned enterprises
(Peng, 2002; Child and Rodrigues, 2005; Buckley et al. 2007; Li 2007; Buckley et al., 2008;
Liu and Tian, 2008; Kim and Rhe, 2009; Ramamurti and Singh, 2009; Hong et al., 2014) as
well as the competitiveness of firms from India, Singapore, Malaysia, and Thailand (Chittoor
and Ray, 2007; Goldstein and Pananond, 2008; Athrey and Godley, 2009).
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Much of the above'noted refinement of the OLI framework was driven by scholarly critique,
including by emerging market MNE researchers. These researchers, for example, faulted the
view of “O1” advantages as pre'conditions for OFDI activity (Goldstein, 2007),
characterising it as more reflective of advanced economy or traditional MNEs, which
dominantly focused on asset exploitation through market'seeking, resource'seeking and
efficiency seeking FDI (Dunning, 1993). Asset exploration and augmentation, the argument
goes, tends to be particularly relevant to strategic asset'seeking EMNEs (Mathews, 2002a;
Luo and Tung, 2007; Gaffney et al., 2014), particularly as they move up the value chain into
more complex and higher value'added activities. This explains their preponderant search for
strategic assets, including knowledge, technology, intellectual property, brands or reputation
or prestige (Moon and Roehl, 2001; Mathews, 2002a, 2002b, 2006a, 2006b; Aulakh 2007;
Amighini et al., 2010; Chen et al., 2012). As Mathews (2002a, 2006b) argues in the now
seminal Linkage'Leverage'Learning (LLL) framework, EMNEs typically accelerate their
international expansion by pursuing collaborative linkages (e.g. joint ventures and alliances)
with foreign companies, leveraging needed strategic assets, capitalising upon opportunities to
upgrade their capabilities and international standing and learn about new sources of
competitive advantage.
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The foregoing should not be interpreted as implying that the FDI activities of EMNEs are
underpinned only by strategic asset'seeking motivations. On the contrary, other classic FDI
motivations, notably search for markets, resources and efficiencies, are also relevant
(Svetlicic, 2004; Amighini et al., 2010; Yeganeh, 2016). Indeed, exploring new foreign
markets to enhance competitiveness against domestic rivals, get closer to customers and gain
knowledge about foreign markets is often a top priority even for EMNEs with sizeable and
rapidly growing domestic markets (Liu and Tian, 2008; Athreye and Kapur, 2009). The
literature, to be sure, offers countless examples of market'seeking FDI among EMNEs,
including Chinese firms’ push into Japan and Southeast Asia ((Matsuno and Lin, 2003; Frost,
2004), Russian firms’ expansion into Eastern Europe (Vahtra and Liuhto, 2004) and South
African MNEs’ expansion into other African markets (Klein and Wocke, 2007; Rolfe, Perri
and Woodward, 2015; Ajai, 2015; Luiz, Townsend and Beswick, 2015; Vorheof, 2016).
Resource'seeking motivations, notably the search for resources, including raw materials and
labour (Makino, Lau, and Yeh, 2002; Cuervo'Cazurra, 2007; De Beule and Duanmu, 2012),
are also amply illustrated by Chinese and, to a lesser extent, Indian FDI to Africa, Latin
America and elsewhere (UNCTAD, 2003, 2004; Goldstein, 2003, 2006; Casanova, 2004;
Gao, 2005; Goldstein, Pinaud, Reisen and Chen, 2006; Buckley et al., 2007). Although
efficiency search tends to be of less importance to EMNEs ' who typically enjoy lower cost'
base via access to cheap labour, abundant natural resources, and government support ', rising
competition in domestic and international markets appears to be changing this. There is
evidence, for example, of EMNEs outsourcing to cut production cost (Sim and Pandian,
2007) or entering developed countries to capitalize on economies of scale (e.g. Tata Group’s
acquisition of UK'Dutch steel group, Corus ' Goldstein, 2008). Enhanced national prestige,
or projecting national identity at the world stage, has further been identified as another
important motivation among EMNEs, particularly those supported by their national
governments (Gaffney et al., 2014).
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Regarding the influence of FDI motivations on location choice, the literature suggests that
MNEs with primarily market'seeking motives tend to prioritise market size indicators (e.g.
population size) in their location decisions, while those with efficiency and strategic asset
seeking motives may respectively prioritise production costs and the availability of suitable
acquisition targets or assets (Giroud and Mirza, 2015) Further research indicates that
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developing economy MNEs with market'seeking motivations tend to gravitate toward more
difficult institutional environments typically found in less developed countries, where their
familiarity with poor institutional contexts, superior ability to manage uncertain, volatile, and
even harsh business conditions (including weak infrastructure, health or security hazards,
vague government policies, and erratic financial markets), or superior capacity to understand
and adapt to local consumer needs and market requirements may offer some advantage over
their advanced economy counterparts (Cuervo'Cazurra and Genc, 2008; De Beule and Van
Den Bulcke, 2009; De Beule and Duanmu, 2012; Ramamurti, 2012; Rolfe, Perri and
Woodward, 2015). Arita (2013) similarly points to shared institutional factors and socio'
cultural proximity across developing markets in explaining the relatively higher presence of
developing economy FDI in the Global South, e.g. the active presence of many Chinese and
Indian multinationals in Africa (Cuervo'Cazurra, 2007; De Beule and Duanmu, 2012; De
Beule and Van Den Bulcke, 2009). Theoretical explanations for the observed locational
pattern reside within the institutional theory as well as the psychic proximity (Johanson and
Vahlne, 1977) and demand similarity (Linder, 1961) models, since such markets tend to be
better suited to the institutional, including cultural characteristics and resource profiles of
developing economy MNEs (Kumar, 2008). On the other hand, developing economy MNEs
that seek strategic assets appear to favour more advanced markets (Zeng and Williamson,
2004; Citigroup, 2005; UNCTAD, 2005; Goldstein, 2006; Amighini, Rabellotti, and
Sanfilippo, 2010) – see for example, Pietrobelli et al. (2010) finding about China’s Haier
acquisition of a well'known brand and manufacturing and R&D facilities in Italy. This bi'
directional tendency of EMNEs to concurrently enter advanced and developing markets
(Guillén and García'Canal, 2009) to access catch'up strategic assets and markets respectively
has recently been characterised as ambidextrous (Yeganeh, 2016).
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With regard to the influence of FDI motivations on entry mode choice (broadly categorised
into transaction'based collaborative modes and hierarchical wholly'owned modes ' Madhok,
1998; Buckley and Casson, 1998; Cui and Jiang, 2010), the extant literature is far from
conclusive. This reflects the susceptibility of the entry mode decision, not only to the MNE’s
strategic intent, but also to myriad of factors, including host government laws and
increasingly complex global value chain relationships (Giroud and Mirza, 2015). That said,
there is some evidence that EMNEs seeking strategic assets, more advanced markets, or
closer customer relationships, to overcome or accelerate away from their latecomer
disadvantages, tend to invest through collaborative modes such as alliances, mergers and
acquisitions (M&A) (Mathews, 2006; Buckley et al., 2007; Goldstein, 2008; Liu and Tian,
2008; Rui and Yip, 2008; Schüler'Zhou and Schüller, 2009; Narula, 2010; Pietrobelli et al.,
2010; Parente et al., 2013; Caiazza, 2016). Conversely, those seeking markets or resources in
other developing countries frequently undertake wholly'owned green'field investments
(Amighini, Rabellotti, and Sanfilippo, 2010), except in sectors where they are barred from
wholly'owned ventures by host government laws (UNCTAD, 2007).
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Overall, the extant literature points to the relevance of multiple motivations in explaining the
FDI decisions, including locational and entry mode choices, of EMNEs (Von Keller and
Zhou, 2004; UNCTAD, 2004, 2005a, 2005b; Das and Banik, 2015). Given the earlier noted
paucity of systematic research on Africa’s nascent MNEs, significant potential exists to
further enrich the literature with insights on these newer MNEs’ FDI motivations. The
following research questions are thus posed:
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Consistent with the present study’s interest in extending emerging MNEs’ research into the
scarcely investigated African region, data was obtained from financial services groups from
West Africa. This region accounts for sixteen [1] of Africa’s fifty'five countries [2], over a
quarter of the continent’s combined Gross Domestic Product (IMF, 2015b), and contributes
significantly to its recent impressive GDP growth (averaged 5 per cent during 2001'2014 and
3.6 per cent in 2015, despite the collapse of commodity prices and the Ebola crisis ' AfDB,
2016). The delineation of the empirical context as West Africa was to minimise the variations
in financial systems across Africa (Beck and Cull, 2013) as well as acknowledge the study’s
exclusion of other sub'regions and their dominant economies. One such economy, South
Africa, has a Stock Exchange and four largest banks that respectively account for about two'
third of the total market capitalisation of Africa’s listed companies and half of the total assets
of Africa’s top 100 banks (KPMG, 2013). The fact that all West African countries share
membership of the Economic Community of West African States (ECOWAS), have
appreciable level of income convergence, particularly within the West African Economic and
Monetary Union zone (AfDB, 2016), and allow cross'border listings in their major stock
exchanges further suggest the sub'region to be a somewhat cohesive context for empirical
research.
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The study’s focus on financial service firms reflects the sector’s status as a major source of
Africa’s OFDI and nascent multinationals (Ibeh, 2009, 2013; BCG, 2011; Ngwu, Adeleye
and Ogbechie, 2014; Nartey, 2015) and a one of the continent’s brightest prospects, with an
extensive and unexploited growth potential (KPMG 2013). Buoyed by a growing middle
class and consumer base, particularly in its major economies (notably Nigeria, South Africa,
Egypt and Algeria), rising real GDP per capita, and vast ‘unbanked’ and increasingly
urbanized population (KPMG, 2013; AfDB, 2016), the sector, especially its retail banking
segment, is developing at pace and is projected to contribute 19 per cent of the continent’s
GDP by 2020 (KPMG, 2013). Many challenges, nevertheless, exist, including rising
competition within the West African banking landscape, driven by the growing presence of
subsidiaries of major global banks and pan African banks (IMF 2015b). For example,
Nigeria, Africa’s largest economy, is a key battleground, so is Ghana, which has seen an
influx of foreign investing banks attracted by opportunities expected from its new oil
economy. The relative small size of several of the sub'region’s economies seems not to deter
intra'African investments in these countries, which typically takes the form of acquisition of
domestic banks mainly by pan'African groups from Nigeria, Togo, and Morocco (Infomineo,
2013). As Rolfe, Perri and Woodward (2015) suggest, market size is not a significant factor
in the location model of African direct investors; they appear to welcome the relatively mild
competition in such smaller markets and to view them not on individual or stand'alone basis,
but as part of larger and integrated sub'regional markets.
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Also, although barriers to entry into retail banking across Africa have been reduced by
significant macroeconomic reforms, financial liberalization and institutional, structural,
policy and regulatory upgrades (African Business, 2011; Ernst and Young, 2012; KPMG,
2013; Beck and Cull, 2013; AfDB, 2016), costs of cross'border expansion are still
compounded by the lack of information'sharing and regulatory harmonization and differing
levels of adoption of Basel III among African economies (Euromoney, 2015, IMF, 2015a).
As AfDB (2016) notes, Africa, despite recent trade liberalisation, still has high tariff and non'
tariff barriers, regulatory and structural impediments and fragmented financial markets that
hinder foreign investment (AFDB, 2016). The bifurcation of the West African banking
landscape into Anglophone and Francophone systems (the latter share a common currency,
an Economic and Monetary Zone, UEMOA, and a common regulator, Central Bank of West
Africa States) has not helped the integration cause. Other notable challenges include the
absence of policy framework for outward FDI; restrictions on capital outflows and profit
remittance; specification of minimum capital threshold for foreign investment; requirement
for local listing of some of the investing bank’s shares to ensure local participation (EIU,
2013); physical and legal impediments to regional integration, including inadequate
infrastructure, non'harmonization of custom procedures and investment regimes and minimal
implementation of policies and protocols agreed by Africa’s many regional and sub'regional
bodies, such as ECOWAS, East African Community (EAC), Southern African Development
Community (SADC), Common Market for Eastern and Southern Africa (COMESA), and the
pan'African Parliament, to foster intra'African investments (Ibeh, 2013).
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Data pertaining to the earlier outlined research questions were obtained using a qualitative
case study approach, a well'established research strategy for addressing ‘why’ and ‘how’
questions, whose potential benefits, notably data richness, depth and quality, typically
compensate for such known shortcomings as limited representativeness and generalisability
(Miles and Hubermann, 1994; Yin, 2003). The approach also responds to repeated calls for
more qualitative designs in international business research (Ghauri, 2004), redresses the
severely limited extant knowledge on African MNEs, and has been employed successfully in
studying emerging multinationals from other regions (e.g. Salas'Porrass, 1998; Bartlett and
Ghoshal, 2000; Sim and Panadian, 2003; Zhang, 2003; Del Sol and Kogan, 2004; Parada,
Alemany and Plenalles, 2009). To ensure good case research protocols and minimise
associated weaknesses, the following procedural steps were implemented.
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First, reflecting the best practice literature, a multinational enterprise (MNE) – the study’s
unit of analysis – was defined as an enterprise that comprises entities in more than one
country and operates under a system of decision'making permitting coherent policies and a
common strategy (UNCTAD, 2008). The entry threshold was, however, tightened by
focusing only enterprises that have undertaken foreign direct investment (FDI) and own or
control value'adding activities in at least two countries outside their home market. Though
not without limitations, this operational definition is deemed sufficient for the exploratory
nature of the present study.
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Second, the study was focused on a pair of financial services groups from West Africa that
could be 'matched' on several potentially significant dimensions. The choice of comparably'
sized MNEs operating in the same industry in the same region served to 'control' for possible
industry effects, and “hold many factors constant” (Buck et al., 2000, p286). In Yin’s (2003)
terms, this amounts to ‘theoretical replication logic’. The multiple case approach adopted
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ensures that findings cannot be dismissed as resulting from one idiosyncratic setting (Miles
and Hubermann, 1994).
Third, taking advantage of the flexibility of the case approach, data from multiple sources
was used (Yin, 2003). Qualitative face'to'face interviews served as the primary data collection
technique (Yeung, 1995), since the study sought to develop “a genuine understanding of the
world views of members of a social setting” (Bryman and Bell, 2007, p477). Specifically,
Regional Manager'level key informants (Philips, 1981) of the selected financial services firms
were interviewed to uncover the underlying motivations for their FDI decisions. Interviews
were based around a topic guide informed by the literature review, with specific questions
relating to underlying motivations for FDI activity, location and entry mode decisions. The
two interviews were conducted by the second'named author in English language, which is the
business language in the study context. They were also recorded and later transcribed by the
same author. The study also drew on secondary data from multiple sources, including
company websites and reports and business press, to complement material obtained from the
interviews. This enabled the triangulation of data (Yin, 2003), lessened respondent bias and
increased validity and reliability of our evidence base (Ghauri and Gronhaug, 2002).
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Fourth, the data generated were subjected to content analysis – a valid and widely employed
method of developing an objective and systematic description of the manifest content of
qualitative and archival data (Holsti, 1968, Aronoff, 1975; Bartunek, Bobko, and
Venkatramen, 1993; Sydserff and Weetman, 2002). This entails transcribing, organising and
categorising the interview data into relevant themes (Sinkovics, Penz and Ghauri 2008)
identified from the earlier stated research questions. The particular form of content analysis
adopted was the meaning'oriented analysis, which requires the researcher to focus on the
underlying themes in the observed data, matching appropriate content with the pre'
formulated research questions, and interpreting the findings accordingly (Aronoff, 1975;
Sydserff and Weetman, 2002). This meaning'oriented analysis is more amenable to an issue'
by'issue presentation approach as it allows for a judicious use of exact quotes from the study
firms to address the explored research questions (Miles and Hubermann, 1994; Yin, 2003).
Both within'case and cross'case analysis (Eisenhardt, 1989) were undertaken.
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The MNEs investigated here are two financial service firms from West Africa, hereinafter
referred to as Company A and Company B. These study subjects are briefly profiled below
(see also Table 1).
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*
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Company A was established in 1985 by private and institutional investors from several
African countries and it employs 20,331 staff in 1250 branches across 36 African and 4 non'
African countries. The incepting vision, according to one of the founders and former chair,
was for a home grown regional financial institution to foster collaboration between the
French and English speaking West African countries as well as promote trade, financial and
economic integration and development within the region. The founders also envisioned an
institution belonging to no country and whose headquarter location was to be decided based
on prospective host governments’ readiness to guarantee an international status, freedom of
movement of capital and other favourable terms; these terms were reportedly agreed by Togo
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and backed up by an act of the country’s parliament (Anonymous, 2014c). The original
regional vision later evolved into a pan'African one, propelled mainly by the company’s
second CEO, who saw an
##
and went after this target ahead of competitors.
Ranked Number 1 by assets in seven African markets and top 3 in fourteen others, and listed
in three West African Stock Exchanges, Company A has expanded mainly through majority
stake acquisitions, specifically the acquisition of existing banks. Its earliest FDI activity was
undertaken in 1989 while the latest, the acquisition of a 96% stake in Banco ProCredit
Mozambique, occurred in April 2014. The company’s revenue for 2014 was USD2.3 billion,
a 46 per cent increase over the previous year and a near quadrupling of its 2008 figures. Profit
before tax also rose by 135 per cent to USD520 million in 2014– see Table 1 for the
contributions of the company’s major geographic clusters. With an asset base of USD24
billion and Tier 1 capital of USD3 billion, Company A has won several prestigious awards
and has for the past several years been included among the world’s 500 top banks by the FT
Banker Magazine. As its interviewed manager remarked, we are “…the dominant bank in
Africa and we have the largest branch network across the continent”.
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Company B was founded in 1894 and is reportedly the most diversified financial service
group in West Africa, with interests in commercial and investment banking, asset
management, insurance and other financial services. It employs 10,464 staff in 862 business
locations across 12 countries, including eight African and four non'African markets. The first
FDI activity was undertaken in the UK in 2002, while its latest investment in Senegal in 2014
completed the firm’s acquisition of the operations of Switzerland's ICB Financial Group
Holdings in five West African countries.
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Company B’s revenue for 2014 is USD2.64 billion [3], a 21.3 per cent increase from the
previous year, with 8.8 per cent of these coming from international subsidiaries. Profit before
tax for the same period was USD511 million. Listed in the Nigerian Stock Exchange and
London Stock Exchange (for Global Depositary receipts’ trading), Company B has won
several prestigious awards and is regularly ranked among the world’s top 500 banks by the
FT Banker magazine. As this company’s interviewee noted, “we started over 120 years ago
and have moved forward from being a local bank here to establishing presence in many
African countries.” This company’s rather late internationalization arguably reflects the
relative recency of outward FDI activity for African companies originating outside South
Africa and North Africa. The earlier discussed dynamics in B’s sectoral, national and
regional contexts, notably the recent sustained economic growth levels achieved by SSA
economies, improving financial, regulatory and policy environments, and the presence of the
Company B’s domestic customers and competitors in several sub'Sahara African markets
(KPMG, 2013; Beck and Cull, 2013; AfDB, 2016) would appear to have influenced their
recent spirited international expansion.
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To explore the study’s first research question, the interviewed managers were asked to
comment on the underlying motivations for their company’s initial and subsequent foreign
direct investment operations.
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The Company A’s interviewee pointed to “the need to capture the African market and have a
large market share in the African market….(as) the main focus of the bank”. This apparently
reflects the company’s mission “to build a world'class pan'African bank and contribute to the
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economic and financial integration and development of the African continent” (Anonymous,
2014a, p4), a mission which seems to have evolved from the company’s earlier noted
founding vision for a home'grown financial institution to foster financial and economic
integration and development within the West African region.
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Evidence further suggests that having expanded across African markets and beyond,
Company A has increasingly focused on consolidating, synergizing and leveraging its pan'
African footprint and technology platform to deliver greater efficiencies and returns (African
Business, 2015) by, for example, by taking advantage of the so'called “network advantage”
to transact swiftly and securely across 36 countries (Anonymous, 2014a, p35). This has
become particularly important given the need to justify their market'seeking activities in
relatively small African markets, outside of the dominant few that account for more than half
of the region’s collective GDP (IMF 2015b). As this company noted, “our diversified, pan'
African model means that we are able to leverage off our presence in other markets when
things begin to weaken elsewhere” (Anonymous, 2015a, p24). There is also some suggestion
of a shift in focus from geographical expansion to the optimisation of existing African
footprint and probable retrenchment of non'performing markets. As a company source
observed:
Going forward, our focus will be to play to our strengths in terms of generating
enhanced returns, exiting unprofitable markets and leveraging digital channels to
improve profitability... (Anonymous, 2014a, p22)
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The foregoing suggests the increasing importance of efficiency considerations in driving
Company A’s FDI activities.
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Regarding Company B, evidence also suggests that the decision to expand its
footprint beyond the home borders, particularly across sub'Saharan Africa, was
motivated by the need to diversify and broaden its geographic earnings profile and
minimise country'specific risks, through supporting customers’ trade requirements,
including for intra'African trade (Anonymous, 2013). The basic reason, as observed
by the interviewed manager, “is to increase our spread…and to grow”. For example,
the company’s recent acquisition of the five ICB Banks in West Africa extended their
bouquet of products and services to these markets (Anonymous, 2014b, p17), which
reflects an underlying market'seeking motivation:…this transaction provides an
immediate and strong platform for regional market entry ...We are committed to
taking a disciplined approach to establishing a broader pan'African footprint...We
believe international expansion can offer a range of benefits, including new growth
options, wider customer benefits, broader geographic earnings profile, reduced
country specific risk towards creating further value for shareholders (Anonymous,
2013, p25)
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The Company B’s interviewee offered another perspective on firm’s market'seeking
motivation, linking it to the need to attract more customers and improve accessibility and
convenience through “globalization of services”. This interviewee noted thus:
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The bank is in the service industry and …(although) the world has become a global
village where you can at a touch of the screen do something, in banking, there is still
that touch point that you need. Some people will tell you that banking is based on
personal relationship. They go to a bank where they know a friend or a relation or
somebody they can rely on. So there is really need for touch points to be everywhere
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because those touch points create convenience for the customer. So it is actually to
establish our presence in other countries that will make banking more convenient and
more accessible to customers that actually informed that decision. Another basic
reason is that the way the industry is going you cannot be an armchair banker and
meet your target. You must go out look for customers and going out include going to
other countries. That helps to garner more strength, and that helps to solidify the bank.
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There is further evidence that, like the other study firm, Company B’s foreign direct
investment activity appears to have an efficiency'seeking sub'theme. This is suggested by its
increasing deployment of integrative mechanisms and technology platforms to leverage
economies of scale, drive for operational excellence and efficiency, and capture value
“through seamless integration of newly acquired subsidiaries”.
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The foregoing analysis suggests the FDI activities of the explored MNEs to be primarily
underpinned by market'seeking motives, with customer relationship, efficiency and mission'
driven motivations as important sub'themes. Market'seeking motivations are indicated not
only by the observed push for market share mainly across Africa, but also by the focus,
particularly of Company B, on facilitating accessibility and customer convenience through
“stamping our foot physically in other countries” and servicing the trade requirements of an
increasing number of their business customers operating across borders. Arguably also, this
company’s later expansion to African markets and choice of South Africa as its first intra'
regional market suggests a focus on the size of market opportunity, a consideration which
seems less obvious in Company A’s case given its presence in several relatively small
African markets. However, it would appear, based on A’s expansion phases outlined in Table
2a, that it views these markets, at least initially, not on individual or stand'alone basis, but as
part of larger and integrated sub'regional markets. That this approach is not unique to
Company A is suggested by a recent finding by Rolfe, Perri and Woodward (2015) that
market size is not a significant factor in the location model of African direct investors who
appear to welcome the relatively mild competitiveness of such less sought after markets.
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The above noted commitment to availing customers of convenient physical touch points
echoes Caiazza’s (2016) finding among Chinese financial service MNEs and reflects a
complementary relationship'seeking orientation ' a perspective further exemplified by the
study firm’s observed focus on developing relationships with individuals and organisations
outside Africa that have current or historical links with Africa, or are seeking to initiate such
links (see also Boojihawon and Acholonu, 2013). Furthermore, the rising emphasis by the
explored firms on leveraging their African footprints for operational excellence and
efficiency gains points to the increasing importance of efficiency'seeking motives. This also
suggests that the study firms may be replicating the historical evolutionary pattern exhibited
by traditional MNEs in their FDI motivations, that is, from being mainly market'seeking
during the first period, to efficiency and strategic asset'seeking in the second and third period
respectively (Giroud and Mirza, 2015).
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To address the second research question regarding how FDI motivations influence location
decisions, the interviewed managers were asked to explain their companies’ FDI location
decisions. It emerged that both study firms, identified by preceding analysis as primarily
market'seeking, overwhelmingly favoured FDI locations within sub'Saharan Africa: 36
African and four non'African markets for A and eight African and four non'African markets
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International Marketing Review
for B. As Table 2a below shows, Company A internationalized early and in phases, from key
West African markets through to Francophone West Africa, Central, Eastern and Southern
Africa, and then selected markets outside the continent. Company B, on the other hand,
commenced its rather late internationalization journey outside the region and is currently
present in eight African markets.
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*Insert Tables 2a and 2b about here*
The Company A’s interviewee underlined the organisation’s emphasis on capturing African
markets, noting that “our focus is mainly and always on the African continent” and offering
“investors unparalleled access to sub'Sahara African banking opportunity”. This manager
also commented on the company’s use of appropriate evaluation criteria to select the most
suitable African countries to enter, thus:
…to select the particular African countries to invest in, we consider factors such as
the population of the country, government policies and political stability, security and
profitability; these are the major factors we consider. The most important factor in
going abroad is how profitable is that market.
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Evidence, indeed, points to a deepening of Company A’s focus on sub'Saharan Africa and its
adoption of a more nuanced, opportunity'focused approach to selecting specific markets and
segments. A recent strategic shift has seen the company streamline its geographic market
clusters, entailing,
, the reinforcement of the company’s leadership position in 10'12
African countries, prioritization of selected segments in another 15 African countries, and
further investigation into its prospects and presence in the remaining countries. As the
company noted, “while we look to maintain market share in the west (Africa), we will also
need to become a major player in the east, so we may invest more into Kenya.” (Anonymous,
2015b, p72)
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Company B also appears to be essentially focused on “establishing presence in select Sub'
Saharan African countries that are of interest”. This, the interviewed manager noted, is
“…because Africa is our continent”. Within this context, the company seems to have
embraced a strategic approach to selecting country markets, with emphasis on matching
company strengths and resources with the potentials of the optional countries. A recent
exercise reportedly involved a detailed and extensive review of potential new markets and
approval by the company’s board of a shortlist of countries over the medium to long'term.
The evaluation process was guided by market opportunity indicators, including levels of
banking penetration and financial system development, levels of income and opportunities in
the retail and corporate sectors, availability of natural resources typically requiring significant
funding, presence of home country businesses requiring support, and political stability
(Anonymous, 2013, p10). Commenting on its recent FDI location decision, the company
noted thus:
Each of the countries has peculiar opportunities that made us go there... So what we
do is that we study each of these countries and their peculiarities and look at the
strength they have…the Senegal’s business climate is conducive to a proven record
for attracting large foreign direct investments. The country’s low banking penetration,
strong prospects for economic growth, and political stability are its strongest selling
points. Ghana is seen as a priority country due to its strong economic potentials, stable
political landscape and available opportunities in the banking and oil and gas sectors
(Anonymous, 2013).
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The foregoing evidence points to a preponderant focus on geographically, psychically, and
institutionally proximate sub'Saharan African markets by the study’s market'seeking MNEs.
This aligns with previous evidence from emerging market FDI location research that
developing economy MNEs with market'seeking motivations tend to target less developed
country markets, which seem better suited to their institutional and resource characteristics
(e.g. Cuervo'Cazurra and Genc, 2008; Kumar, 2008; Arita, 2013). The present study was,
however, unable to assess previous research evidence that strategic asset'seeking EMNEs
favour more advanced markets (Zeng and Williamson, 2004; Citigroup, 2005; UNCTAD,
2005; Goldstein, 2006; Amighini, Rabellotti, and Sanfilippo, 2010; Pietrobelli et al. 2010) as
strategic asset'seeking motives were not observed among the study firms. What can be
posited is that the MNEs explored in the present study appear, at least latterly, to be evolving
toward a more nuanced and layered location decision approach, which prioritizes sub'
Saharan African markets, but selects particular country markets based on factors such as
population size and market stability, security and profitability. The literature suggests these
criteria to be particularly influential in the FDI location decisions of market'seeking MNEs.
Giroud and Mirza (2015), for example, noted that MNEs with primarily market'seeking
motives tend to prioritise market size indicators (e.g. population size) in their location
decisions, while those with efficiency and strategic asset seeking motives may respectively
prioritise costs of production and the availability of suitable acquisition targets or assets.
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Regarding entry mode decisions, previously noted evidence suggests a preference for the
acquisitions of existing entities by the study firms – see Tables 2a and 2b.
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Company B explained its acquisition'based entry into Congo as motivated by the need to hit
the ground running within the shortest possible time, whilst also obviating some of the legal
and regulatory issues associated with foreign investment. The interviewed manager noted
thus:
The bank we took over in Congo…has one of the highest number of customers.
Because you cannot beat them without customers …you see them as a threat… so the
strategy we used there is actually an acquisition so that we will have the base of
somebody that is already on ground, then modify the strength of that organization like
in this case, customer strength, then add service delivery and product offering to it to
get to where we are. So that was our strategy in Congo…Everybody knows that as
you go from one country to the other there are legal and international issues to
resolve.
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This company’s recent 100 per cent acquisition of the Swiss ICB’s operations in five West
African countries was also reportedly driven by the opportunity to enter multiple markets
within the region in an organised manner and under one franchise. As the interviewed
manager observed, the “transaction provides an immediate and strong platform for regional
market entry through a brownfield transaction…”
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The company further explained that the acquisition mode “presents a cost'effective strategy”,
since a green'field investment “would be more expensive, more time consuming and
unavailable in some countries like Ghana”. By gaining full controlling interest and strategic
control, Company B was able to consolidate the target subsidiaries’ earnings, whilst also
deploying its group'wide innovation project to craft a new growth path, break new grounds,
open new frontiers and unearth newer significant revenue streams (Anonymous, 2014b, p16).
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International Marketing Review
Company A also explained their predominant use of acquisition method as guided by the
need to achieve the company’s “strategic goal of increasing market share”, further noting
that:
the acquisition will create a leading financial services institution with
strong market share in all metrics and a powerful distribution network
(Anonymous, 2011).
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The foregoing evidence, particularly the recurring references to increasing market share,
hitting the ground running, entering multiple markets in an organised manner, and opening up
new frontiers, suggests that the study firms were primarily motivated by market'seeking
reasons in their entry mode choices. Their observed preference for mergers and acquisitions
(M&A) – used in 24 African markets by Company A and 6 African markets by B – reflects
the favoured entry modes of South African MNEs expanding into other African countries
(Vorheof, 2016). Probable explanations for this may include the relatively modest cost of
acquiring businesses in other African countries and the regulatory challenges involved in
acquiring banking licence in African countries, a point repeatedly alluded to by Company B
above and which exemplify the kind of regulatory impediments (EIU, 2013; AfDB, 2016)
discussed earlier under the Study Context. Support appears not to exist, however, for previous
evidence from wider EMNE research that market'seeking developing country MNEs tend to
favour wholly'owned green'field investments when investing in other developing countries
(Amighini, Rabellotti, and Sanfilippo, 2010). In another departure from the literature, both
study subjects have tended to undertake wholly owned green'field investments,
the less
resource'demanding type, in more advanced non'African markets, rather than the
collaborative modes suggested by some previous research (Amighini, Rabellotti, and
Sanfilippo, 2010). The observed lack of support arguably reflects the earlier noted
inconclusive nature of the research evidence regarding the influence of FDI motivations on
entry mode decision (Giroud and Mirza, 2015).
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*Table 3 about here*
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This paper draws on case study evidence to explore the dominant motivations for the foreign
direct investment activities, including location and entry mode decisions, of nascent MNEs
from West Africa. It contributes in a number of ways, notably providing fresh empirical
evidence on this rarely studied category of developing world MNEs and extending the
geographic compass of research on FDI motivations. The study also identifies some
distinctive aspects of the explored MNEs’ FDI behaviour as well as convergences with their
advanced economy and emerging market counterparts.
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Analysis evidence points to the primacy of market seeking motivations in explaining the FDI
activities of the investigated MNEs. The initial trigger and overarching FDI motivation was
the search for new cross'border market opportunities, but relationship, and efficiency seeking
considerations also emerged as important sub themes; the latter seemed particularly relevant
for subsequent rather than initial FDI activities of the MNEs studied. It further emerged that
these primarily market'seeking MNEs preponderantly favoured geographically, psychically,
institutionally proximate sub'Saharan African markets, and appear to select particular country
markets based on market size indicators and opportunity'risk profiles. Evidence also reveals a
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preference for transaction'based acquisition entry modes, with green'field investments only
employed in a handful of cases, mainly in more advanced non'African markets.
The foregoing summary findings should be considered tentative, particularly given the
present study’s reliance on a few case study firms. They, nevertheless, raise a number of
important issues, which are now discussed.
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First, the overarching market'seeking motivation reflects an essential tendency among MNEs
to pursue market and customer base expansion through foreign direct investments. This
appears to be the case with the explored nascent MNEs from West Africa. However, unlike
their advantage'laden and better resourced counterparts from more advanced economies, the
present study firms’ market'seeking FDI does not appear to be driven by asset exploitation
reasons. It is also not explained by asset exploration considerations often associated with
strategic asset'seeking EMNEs (Mathews, 2002a, 2006a). One major impetus revealed by
study evidence was the founders’ vision to create a regional financial institution and later a
pan'African champion, a vision supported by institutional shareholders, including national
and regional governments, organised private sector bodies and supranational organisations.
This observation points to a mission'driven FDI motivation previously unheralded in the
literature. Though not conceptually far removed from the motivation underpinning the
aggressive internationalization of state'owned or state'sponsored emerging economy MNEs,
the observed mission'driven motivation uniquely reflects the vision of private sector founders
rather than the policy aims of national governments or their agencies. Previous studies
among EMNEs, particularly Asian ones (Child and Rodrigues, 2005; Buckley et al., 2007;
Goldstein and Pananond, 2007; Dunning and Lundan, 2008; Kalotay and Sulstarova, 2008;
Ramamurti, 2008; Athreye and Godley, 2009; Kim and Rhe, 2009), attribute such MNEs
with typically more support from their home governments than their African counterparts.
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Second, the observed importance of relationship and efficiency'seeking sub'themes
reinforces the narrative of multiple FDI motivations associated with traditional MNEs
(Dunning, 1993, Giroud and Mirza, 2015) and EMNEs (Von Keller and Zhou, 2004;
UNCTAD, 2004, 2005a, 2005b; Das and Banik, 2015), and suggests the continuing relevance
of classic FDI motivations in our increasingly complex, multi'polar world (Giroud and Mirza,
2015). The relationship seeking motivation echoes recent evidence among Chinese financial
service firms (Caiazza, 2016), and points to additional similarities between the explored
nascent MNEs and their emerging market counterparts. This finding also makes sense given
that the focal industry, more than most, typifies the service (and relationship) dominant logic
popularised by Vargo and Lusch (2004). It should be further noted that the heightened
influence of efficiency considerations at the latter stages of the explored MNEs’ FDI journey
points to the gradual maturing of Africa’s nascent MNEs. It also reflects the dynamic nature
of FDI motivations, as suggested by their earlier described historical evolution, from a
dominant market'seeking era to efficiency and strategic'asset seeking epochs (Giroud and
Mirza, 2015). The nascent MNEs explored in the present study seem to be following this
evolutionary pattern, unlike some EMNEs that seek accelerated access to strategic assets via
FDI (Mathews, 2002a, 2006b).
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Third, the observed preference for psychically and institutionally'similar African countries by
the study subjects supports previous evidence from emerging market FDI location research
that market'seeking developing country MNEs tend to target less developed country markets,
which seem better suited to their institutional and resource characteristics (e.g. Cuervo'
Cazurra and Genc, 2008; Kumar, 2008; Arita, 2013). This essential focus on regional markets
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International Marketing Review
seems intuitively sensible at this nascent stage of development of African MNEs’
development as it is consistent with the demand similarity model (Linder, 1961) and the
incremental, risk'minimising psychic and institutional proximity notions (Johanson and
Vahlne, 1977; Yeung, 1999). More broadly, it aligns with Rugman’s contention that a vast
majority of international companies, including traditional MNEs, are regionally focused
rather than global, as only a handful meet the threshold of having a quarter of their revenue,
employment and assets outside of their home region (Rugman, 2003; Rugman and Verbeke,
2004). Again, the above pattern appears inconsistent with the behaviour of strategic asset'
seeking EMNEs, who reportedly exhibit a more global outlook in their location of FDI
activities (Mathews, 2006a, 2006b).
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Fourth, the observed preference for the acquisition entry mode by the explored firms
reinforces previous research evidence that emerging market MNEs prefer non'organic
collaborative entry modes such as alliances and acquisitions (Rui and Yip, 2008). This
arguably reflects the ‘leverage’ dimension of Mathews’ LLL framework (Mathews, 2006a)
and underscores the importance placed by EMNEs on leveraging the assets, networks and
facilities of acquired entities to mitigate their liability of foreignness and achieve speedy take'
off in new markets. The widespread use of majority stake and wholly'owned operations also
suggests a priority focus on strategic control of international operations. However, the present
study’s evidence does not bolster the view that market'seeking EMNEs tend to favour green'
field investments in other developing country markets (Amighini, Rabellotti, and Sanfilippo,
2010). On the contrary, the explored nascent MNEs largely undertook green'field
investments,
low resource'demanding types, in non'African markets.
lM
na
The above reference to resources draws attention to the most pervasive of the fault lines
between Africa’s nascent MNEs and their advanced economy and emerging market
counterparts, which perforce impacts the study firms’ FDI motivations. Having neither the
entrenched firm'specific advantages and broadly positive country'of'origin perceptions of
their advanced economy counterparts, nor the government'augmented resource position of
their emerging economy, particularly Asian, counterparts, the present study firms appear to
have shied away from costly strategic'asset seeking FDI (Mathews, 2002a; Gaffney et al.,
2014). This relatively modest resource position may also explain their minimal engagement
in flag'flying, prestige seeking investments, in contrast to EMNEs, particularly state'owned
enterprises (Hong et al., 2014). It also arguably explains the largely nominal presence of the
explored nascent MNEs in advanced markets, as reflected in an interviewee comment that
“offices outside the continent are just representative offices”. Lacking, thus, the global
resonance and resource base of their traditional and emerging market counterparts and
unfettered by the dictates of global value chain partners (Giroud and Mirza, 2015), the
present study firms appear to have embraced their role as regional FDI players, actively
seeking market opportunities, and ancillary relationship and efficiency'seeking aims, across
Africa.
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The challenge and clarion call for Africa’s nascent and potential MNEs, going forward, is to
continue to strengthen their positions across African markets. This echoes the conclusion of a
recent UNCTAD investment strategy, which counsels growth'seeking companies to target
regional market opportunities as a learning platform for future expansion into more
challenging global markets (UNCTAD, 2008). Thus, by initially extending their investment
footprints to other African markets, these MNCs may be signalling a strategic intent to
15
Page 17 of 31
upgrade their knowledge base and skills'set and strive for future global competitiveness. This
evolutionary path is consistent with the learning'by'doing and ‘stage’'based approaches
observed among earlier generations of Third World Multinationals (Lall, 1983; Wells, 1983;
Tolentino, 1992).
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Yet, even as they strive to lead across African markets, the continent’s population of emerging
MNEs must focus priority attention to augmenting their limited resource and capability
profiles. This entails,
, learning key lessons from their traditional and emerging
market counterparts, tapping into their global diaspora networks for managerial talent,
knowledge assets and investments, and collaborating with suitable entities to establish
satellites or outposts for further international expansion.
tio
na
Policy makers are urged to support the observed market'seeking motivations of Africa’s
nascent MNEs on the understanding that they are, based on theory, bound to be supplanted
by higher order FDI motivations (Giroud and Mirza, 2015). The above noted regional focus
also merits support given its potential impact on the emergence of more integrated African
markets, with the size, scale and growth opportunities to sustain larger enterprises. Increased
intra'African investments may also lead to significant job creation, knowledge transfer and
even infrastructure development in markets, which are typically deemed minimally attractive
by major global MNEs. This offers the best chance of sustaining the laudable presence of
nascent MNEs in post'conflict or fragile African markets, and mitigating threats to such
presence that may arise, for example, from the geographic footprint optimisation signalled
by one of the study firms. Policy response is also urgently required to mitigate immediate
threats to African MNEs’ pan'African expansion, notably the transfer of macro'financial or
systemic risks across countries which may arise from shortcomings in cross'border
regulation and transparency'promoting oversight (IMF, 2015a).
ar
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The foregoing steps are particularly important given the imperative of mobilising Africa’s
private sector to boost its contribution toward meeting the continent’s substantial
developmental challenges. Although not always consistent, previous studies on the impact of
FDI on home economies, including from developing economy MNEs operating in other
developing countries (Tolentino, 1992), largely suggest favourable net effects on employment,
technological and managerial knowledge (Buckley et al., 2007; Moran, 2007). This notion of
FDI'driven economic transformation broadly aligns with earlier theories at the FDI'economic
development nexus, notably the
#
&
and the
+
(Ibeh, 2009).
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The present study’s limited empirical base reflects the extra layers of difficulties associated
with undertaking field work in Africa, and underscores the need for more substantive, larger
scale, research effort to further illuminate the issues investigated. Such future work should
assess propositions derivable from the present study (see Table 4), including the
susceptibility of African MNEs to multiple FDI motivations, notably mission'driven
motivation; the minimal relevance of strategic asset and prestige seeking motivations; and
the observation that market'seeking African MNEs tend to invest in psychically and
institutionally similar economies and are unlikely to be driven by asset exploitation reasons.
Additional themes that may be assessed include the preference by African MNEs for non'
organic collaborative entry modes and strategic control of FDI operations.
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16
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*Table 4 about here*
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[1] These include the English'speaking Nigeria, Gambia, Ghana, Liberia, Sierra Leone; and
the French'speaking Benin Republic, Burkina Faso, Cape Verde, Cote d’Ivoire, Guinea,
Guinea'Bissau, Mali, Niger, Senegal, Togo and Sao Tome and Principe.
tio
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[2] In addition to the above, Africa’s fifty five countries include Angola, Botswana, Lesotho,
Madagascar, Malawi, Mayotte, Mozambique, Namibia, Zambia, Zimbabwe, South Africa,
Swaziland (Southern Africa), Cameroun, Central African Republic, Chad, Comoros, Congo
DR, Congo Brazzaville, Equatorial Guinea, Gabon, Zaire (Central Africa), Burundi, Djibouti,
Eritrea, Ethiopia, Kenya, Mauritius, Rwanda, Seychelles, Somalia, South Sudan, Sudan,
Tanzania, Uganda (East Africa), Algeria, Egypt, Libya, Mauritania, Morocco, Tunisia (North
Africa Arab countries),
na
[3] The Nigerian Naira exchange rate as at Dec 31, 2014 was N1 to USD.0055.
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Page 18 of 31
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