Internationalization of African Firms: Nature, Drivers, Outcomes and Boundary Conditions

Africa’s participation in international business and world trade has been a topic of intense scholarly, practitioner and policy debates for several decades (Ibeh, Wilson, & Chizema, 2012). While some have argued that Africa economies are improving and becoming relevant in the international business arena (Marzo & Patterson, 2010), there is a growing contention that Africa is still unable to contribute meaningfully to the global economy given the dominance of commodities and raw materials in Africa’s international trade activities (Henson, Masakure, & Cranfield, 2011). While the debates continue, evidence is emerging to suggest that the speed, scope and scale at which African firms have been investing in the global economy is growing (McNamee, Pearson & Boer, 2015; Krüger & Strauss, 2015). For example, in the financial services industry, more than 70 African banks have emerged to become dominant international players (Beck, Fuchs, Singer & Witte, 2014):

Ecobank, Standard Bank and First National Bank individually hold over 30% of banking assets in nine countries. Beyond banking, African multinationals have emerged in the telecommunications, manufacturing, energy, agribusiness, aviation, and technology sectors, with firms such as MTN, SABMiller, Telkom, Dimensions Data, Massmart, Nampak, Shoprite, Dangote, Oando, Glo, Interswitch, Nakumatt, Smile and Sasol expanding to several countries and positioning themselves as major international players (Adeleye, Ibeh, Kinoti & White, 2015).

Given these impressive performances of African multinationals on the global stage in recent times, the Boston Consulting Group have identified 40 African global challengers, 18 from Southern Africa, 17 from North Africa region, 3 from Western Africa, 2 from South-Eastern Africa. There are five categories of these African challengers: The Big Local Players: these are African multinationals with assets and sales which are more than 90% domestic, but continue to record impressive international activity gradually; the Exporters: these are firms that have a vast majority of their coming from exporting operations, but have assets that are largely local; the Regional Players: African firms with at least 10% of their assets located outside of their home country but within Africa; the Multi-continental Players having at least 10% of their assets outside of Africa; and the Global Players comprising of African multinationals with more than half of their assets outside of the continent.

The current trend in the internationalization of African firms reveals a picture of a unique variety of factors propelling African firms to internationalize: reliance on formal and informal networking ties; the tendency to serve regional African markets; the dominance of the service sector, rising number of early stage and minority entrepreneurs, among others. Given the rising number of African firms on the international stage, Africa has recently been captured in the global press for being at the receiving end of burgeoning international business and politics (Schwarz & Yellin, 2013). For example, a recent Ernest and Young’s business attractiveness survey concluded that “While skeptics still abound […] a critical mass of African economies have grown at high and sustained rates; so much so that, despite the impact of the ongoing global economic situation, the size of the African economy has more than tripled since 2000.

The outlook also appears positive, with many parts of the region forecast to continue experiencing relatively high growth rates and a number of African economies predicted to remain among the fastest growing in the world for the foreseeable future” (Ernest and Young, 2013: 4). Notwithstanding these promising trajectories, several issues remain unresolved. For example, questions are asked about how much of these international business activities are truly Africa originated and whether African firms are ready to handle the influx of foreign multinationals hurrying to Africa to take advantage of the emerging opportunities on the continent (Bräutigam & Xiaoyang, 2011). The increasing internationalization of African markets has also drawn attention to related issues of Africa’s inadequate infrastructure, undersupplied skilled workforce, weak market-supporting institutions, militarized borders, and heterogeneous socio-cultural terrain.

Despite these unique but intriguing features, empirical research directly examining the nature, drivers, outcomes and boundary conditions of the internationalization behavior of African firms is lacking. While recent scholarly international business (IB) works have focused on economic renaissance occurring in Africa (Nwankwo, 2012) and with leading IB scholars calling for greater coverage of African related topics in the IB literature (e.g., Teagarden, 2009; Babarinde, 2009), scholarly efforts to understand how African firms are strategically managed for international competitiveness have only recently begun to take shape (e.g., Kropp, Lindsay, & Shoham, 2006; Fukunishi, 2009). This call, therefore, is an attempt to draw scholarly attention to interesting and challenging research themes on African firms investing in the global economy. To this end, this call seeks manuscripts that help enrich scholarly understanding of how conditions in Africa help explain the nature, drivers, outcomes and boundary conditions of internationalization behavior of African firms. Studies that examine international business activities of African firms of all sizes (including micro, small and large multinational enterprises) and ownership forms (e.g., state-owned, privately-owned, private-public partnership enterprises) are welcome.

We welcome both conceptual and empirical (quantitative, qualitative or mixed method) papers that address the following research questions or topics:

1. Do African firms exhibit unique internationalization behaviors that can help extent extant IB theory?
2. What are the motivations for, and outcomes of, Africa-to-Africa internationalization strategy?
3. Do similar-aged African multinationals internationalize in the same manner as other emerging market or developed economy multinationals?
4. Do African foreign direct investors emphasize different factors than non-African investors in deciding if and how to invest in Africa?
5. Do African multi-continental and global players emphasize different factors when investing in Africa than non-African countries?
6. What are ownership advantages in the context of intra-African Foreign Direct Investment (FDI)? How can internationalizing African firms help broaden the concept of ownership advantages?
7. How do the springboard and linkage-leverage-learning perspectives apply to internationalizing African firms?
8. To what extent do colonial heritage influence location decisions of internationalizing African firms? Do regional economic blocs (e.g. Economic Community of West African States) and trade agreements play a role in the international location decisions of internationalizing African firms?
9. What kinds of resources and capabilities do African firms need to internationalize rapidly?
10. To what extent can managerial network ties help or hurt internationalization of African firms?
11. Do rapidly internationalizing African firms perform better than their counterparts that follow a more gradual process of internationalization?
12. How do institutional conditions in African markets help African firms penetrate and grow in foreign markets with similar conditions?
13. How do industry-, country-, sub-regional-, regional-specific or firm-specific factors condition the international performance effects of international strategies of African firms?
14. What role does stakeholder engagement play in the internationalization of African firms?
15. Can international companies operating in African markets enhance their performance by being good corporate citizens? Does commitment to corporate social responsibility (CSR) and sustainability initiatives translate into positive financial results in Africa? What factors moderate the impact of CSR and sustainability strategies on performance for internationalizing African firms?

Kindly note that the above listed research questions or topics are in no way exhaustive.

We encourage authors to think about research questions that creatively address the core theme of the special issue call.

Guest Co-Editors:           

Dr. Nathaniel Boso, University of Leeds, UK Prof. Kevin Ibeh, Birkbeck University of London, UK Prof. Amon Chizema, University of Birmingham, UK Dr. Ifedapo Adeleye, Lagos Business School, Nigeria

Guidelines and Submission Information

All manuscripts should be submitted to the special issue at manuscript central at:

http://mc.manuscriptcentral.com/tibr. Authors must follow directions for submission for submitting manuscripts to TIBR, which available at http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1520-

6874/homepage/ForAuthors.html. It is important for authors to note that all papers submitted to the Special Issue will be subjected to double-blind peer review in accordance with TIBR guidelines. For further information please contact any of the Guest Editors for this Special Issue.

A special paper development workshop will be organized on this theme at the Academy of International Business Sub-Sahara Africa Conference in August 2016 in Lagos, Nigeria.

References

Adeleye, I., Ibeh, K., Kinoti, A. & White, L. (2015). The Changing Dynamics of International Business in Africa. Basingstoke and New York: Palgrave Macmillan.

Babarinde, O. A. (2009). Africa is open for business: A continent on the move. Thunderbird International Business Review, 51(4), 319-328.

Bräutigam, D. & Xiaoyang, T. (2011). African Shenzhen: China's special economic zones in Africa. Journal of Modern African Studies, 49, 1, 27-54.

Ernst and Young (2013). Getting Down to Business: 2013 Attractiveness Survey. Ernst and Young: Emerging Markets Center.

Fukunishi, T. (2009). Has Low Productivity Constrained the Competitiveness of African Firms? A Comparison of Kenyan and Bangladeshi Garment Firms. The Developing Economies, 47(3), 307-339.

Henson, S., Masakure, O., & Cranfield, J. (2011). Do fresh produce exporters in sub- Saharan Africa benefit from GlobalGAP certification? World Development, 39(3), 375-386.

Ibeh, K., Wilson, J., & Chizema, A. (2012). The internationalization of African firms 1995–2011: Review and implications. Thunderbird International Business Review, 54(4), 411- 427.

Kropp, F., Lindsay, N. J., & Shoham, A. (2006). Entrepreneurial, market, and learning orientations and international entrepreneurial business venture performance in South African firms. International Marketing Review, 23(5), 504-523.

Krüger, R. & Strauss, I. (2015) “Africa rising out of itself: The growth of intra-African FDI”, Columbia FDI Perspectives, 139: January 19.

Marzo, F., & Patterson, S. (2010). Africa’s outlook. OECD Observer, 279, 64–65.

McNamee, T., Pearson, M. & Boer, W. (2015) Africans Investing in Africa:

Understanding Business and Trade, Sector by Sector. Basingstoke and New York: Palgrave Macmillan.

Nwankwo, S. (2012). Renascent Africa: Rescoping the landscape of international business.

Thunderbird International Business Review, 54(4), 405-409.

Schwarz, G. and Yellin, J. (2013). Obama in Tanzania, sees Africa as next global economic success. Available online at www.cnn.com/2013/07/01/world/africa/tanzania-obama/index.html?hpt=wo_c2.

Teagarden, M. B. (2009). Sub‐Saharan Africa at a key inflection point. Thunderbird International Business Review, 51(4), 317-318.