Nascent multinationals from West Africa: Are their foreign direct investment motivations any different?

Kevin Ibeh, Idika Uduma, Dilshod Makhmadshoev, Nnamdi Madichie

Research output: Contribution to journalArticlepeer-review

22 Citations (Scopus)

Abstract

Purpose
The purpose of this paper is to explore the motivations underpinning the foreign direct investment (FDI) activities, including the location and entry mode decisions, of nascent multinational enterprises (MNEs) from West Africa.

Design/methodology/approach
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.

Findings
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.

Research limitations/implications
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.

Practical implications
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.

Originality/value
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 emerging market multinational enterprisess.
Original languageEnglish
Pages (from-to)683-708
Number of pages26
JournalInternational Marketing Review
Volume35
Issue number4
Early online date29 May 2018
DOIs
Publication statusPublished - 13 Jul 2018
Externally publishedYes

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