Principales países a los que Ecuador importa bienes

In developing economies, there is an increase in small or medium-sized internationalising firms (Ibeh et al., 2017). Concerning SSA, the emerging trend is of firms that are indigenous to the region and are carrying out FDI to other African countries and beyond. This study does not consider the trend as just a regional occurrence and argues that such firms from the region are MNEs. They are regarded as multinational once they cross the border into another country, even within the same region. Movement across borders for FDI immediately changes the dynamics of operation for the internationalising firm.

42 Table 2.3: Emerging Markets Theories & Approaches

Emerging Markets Theories & Approaches

Theory/Approach Focus Author Relevance to Study

OFDI Approaches OFDI is influenced by factors such as: local partnerships Lall (1982, 1983), Wells SSA countries have conditions that fit the government support, economic growth, market size, culture (1983), Lecraw (1977) the description of developing countries

Technology & Innovation Technology accumulation by countries aids their OFDI Lecraw (1993) SSA countries adapt technologies to fit the Approaches Technology adaptation for less developed countries is basis Cantwell & Tolentino (1990) rugged conditions in their environment

for OFDI

Generic Strategies Emerging markets OFDI strategies; Local optimiser, Ramamurti, (2009b) Strategies are generalisable for developing low cost partner, industry consolidator, global first mover Ramamurti & Singh (2009) countries and extendable to SSA. South to South Demarcation of FDI between 'North' and 'South' countries Ramamurti, (2009a) and South to North OFDI is emerging in SSA

Linkage, Leverage and Exchangeable external resources used to internationalise Mathews (2006) Instances of rapid internationalisation in SSA

Learning (LLL) rapidly.

New International Internationalisation through low cost technology, moderate Oviatt & McDougall (1994) Internationalisation of firms is gaining

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The firm moving across borders needs to have plans in order to deal with businesses in multiple currencies and in different locations. Even if the crossed border is adjacent to the home country, there may still be a huge cultural and social variance to that of the host country. All of these factors qualify such a firm to be an MNE. For instance, an MNE from English-speaking Nigeria that seeks to invest in neighbouring French-speaking Cameroon will immediately encounter a huge psychic distance in terms of language and the diversity of culture between the two neighbouring countries. This scenario is quite common across the SSA region, which is very diverse in many respects.

In this regard, past research on OFDI and internationalisation in SSA had been scarce. Some early studies, such as Ssemwogerere and Kasakende (1994) and Wangwe (1995), only focused on the export of goods and services. Page and Willem te Velde (2004) examined possible push and pull factors but did not draw firm conclusions on specific factors due to a lack of data. Given the dearth of research in SSA, Ibeh et al. (2012) comprehensively reviewed the existing literature, which was mainly economics oriented, and called for more firm-level studies. A body of research is developing, which is necessary to review. BCG (2010) discusses some internationalising African firms in an informative study, but it not generalisable to SSA as it is inclusive of firms from North Africa, which have a different political and socio-economic nature to those in SSA. Dalberg (2011) conducted a similar informative study, but it lacks the relevant context as it includes state-owned enterprises (SOEs), which are beholden to governments and have a higher risk preference when compared to private firms (Ramasamy et al., 2012). Manyuchi (2017) studied OFDI from the energy sector in South Africa and found that it aids technology transfer to developing countries in the region. Jekanyika Matanda (2012) carried out a case study on internationalising SMEs from Kenya and found that firms use an incremental approach to internationalisation and are driven, among other factors, by improving market share and managerial orientation. Boojihawon and Acholonu (2013) examined OFDI from Nigeria and Kenya based on case studies and interviews relating to four Nigerian banks and one Kenyan Bank. The study found that market growth, strategic alliances, client following, international influence, and networks are important OFDI factors. The findings here are useful, but they only focus on the banking industry in two countries. Ibeh (2015) conducted case studies into emerging multinationals from Africa and identified drivers for OFDI that include knowledge capabilities, resource seeking, relational assets, efficiency seeking, networks, and market-seeking motivations.

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Ngwu et al. (2015) conducted a case study into Nigerian banks and argued that internationalising SSA firms often encounter liabilities relating to their ‘Africanness’ with regard to different cultural beliefs and contexts. A study by Luiz and Stephan (2011) examined the factors influencing South African telecommunications firms’ investments in SSA, which include market size, openness, regulatory policies, stability, and country governance. Anwar and Mughal (2017) also considered the locational determinants of South African OFDI with respect to cross-border mergers and acquisitions (M&As). Using macro-economic data and quantitative techniques, they found that South African OFDI is driven by market-, efficiency-, and natural assets-seeking motives. These studies provide useful insight into OFDI factors but are limited to South Africa.

In addition to the aforementioned research, some sectoral studies have emerged in a publication edited by Adeleye, Ibeh, Kinoti, and White (2015). For example, Ajai (2015) use secondary sources to consider the reasons why OFDI from Africa can fail, the reasons for which include institutional voids, scarcity of resources, managerial inefficiencies, competitive intensity, unreliable networks, and a lack of strategic direction. In addition, Rolfe, Perri, and Woodward (2015) examine the location choices of indigenous and non-indigenous African firms between 2008 and 2013. They contend that market size is not relevant to African firms when making greenfield investments. They also argue that colonial bias with regard to Francophone and Anglophone African countries impedes the internationalisation of indigenous firms. This study further argues that FDI from Kenya and Nigeria is mainly regional based and that from South Africa is continental. However, this macro study does not have the benefit of robust primary data to support its findings. Moreover, the study relies on the HDI index as a variable, which has limitations with regard to the generalisability of findings. Other studies in the publication include Grosse (2015), who also considers OFDI activities from the South African banking sector, using Standard Bank as a case study. He reviews the competitive intensity in the local banking sector and market entry into other African countries and Asia. Adeleye et al. (2015) examine the banking sector in Africa and OFDI activities, using First Bank of Nigeria as a case study, and identify the key drivers for OFDI to be market growth, competitive intensity, Pan-African vision, and managerial strategy. Another publication with some emergent studies is that edited by Adeleye, White, and Boso (2016), who maintain that the SSA region is characterised by volatility, uncertainty, complexity, and ambiguity (VUCA), in addition to the liabilities of smallness and

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newness. In this publication, Boso et al. (2016) argue that internationalisation in Africa is driven by factors such as networking and inter-organisational cooperation, servicing regional markets, dominance of services, and the emergence of early-stage entrepreneurs. Amungo (2016) examined OFDI from Nigerian banks. In addition to secondary data, questionnaires from five Nigerian banks were statistically analysed, and it was found that market opportunities, client following, local regulations, technological assets, and strategic decision making are key factors. Ogbechie and Iheanachor (2016) also conducted a case study on Kenyan OFDI using Equity Bank’s entry into Nigeria. Their study reveals that strategic intent, foreign training, competitive advantages, and altruistic Pan-African reasons for risk diversification from Kenya’s turbulent political environment influence OFDI. There are, however, cultural and integration issues to be surmounted in the OFDI process. Another study examined intra-African FDI in the context of electricity in Uganda (Mbalyohere, 2016), underscoring the importance of institutional support, stronger regionalisation strategies, socio-cultural knowledge, and local linkages as drivers for OFDI. All of these studies make useful contributions to the body of research, but they are lacking in several ways. For instance, there is an overt reliance on secondary data, without the general provision of primary data as evidence. In cases where primary data is used, there has not been robust cross-analysis across firms and sectors regarding the various issues. These shortcomings notwithstanding, the studies provide a broad base of knowledge that helps to develop further research. More contextual frameworks and emergent approaches on OFDI in the region are required. After a synthesis of the literature on SSA OFDI, they can be categorised into different research streams: knowledge, OFDI factors, regional culture and institutions, competitive advantage, and network, an overview of which can be seen in Table 2.4.

46 Table 2.4: SSA Approaches

SSA Approaches

Approach Focus Author Relevance to Study

Knowledge Incremental knowledge, knowledge capabilities and cultural knowledge Matanda (2012), Ibeh (2015) Knowledge is a vital source of

can be used to explain internationalisation Anwar & Mughal (2017) firm capability

OFDI Factors OFDI in SSA driven by; market, resource & asset seeking, competitive Ibeh (2015), Adeleye et al. (2015) Various factors require to be

intensity, market growth. Grosse (2015) considered for SSA OFDI

Regional Culture & Cultural beliefs and context; Liabilities of Smallness and Newness. Ngwu et al(2015), Boso et al (2016) Culture and institutions play an

Insitutitions Liabilities of Africanness important role in process of firms

Competitive Advantage Vision, managerial strategy, strategic intent, strategic decision making Adeleye et al (2015), Amungo (2016) SSA firms have increased aware

are important to the internationalisation process Ogbechie and Iheanachor (2016) ness of their competitive advantages

Network Local embeddedness, networking and organisational co-operation Mbalyohere (2016), Ibeh, (2015) Network linkages are an embedded

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