Do Strategic Motives Affect Ownership Mode of Foreign Direct Investments (FDIs) in Emerging African Markets? Evidence from Ghana (original) (raw)

Understanding establishment mode choice of foreign manufacturing firms in Ghana

International Journal of Emerging Markets , 2015

Purpose – The purpose of this paper is to analyse the foreign direct investment (FDI) strategies of manufacturing firms in Ghana using the eclectic model in order to understand how ownership, location and internalization factors impact FDI to developing countries like Ghana. Design/methodology/approach – The authors use a quantitative methodology in order to statistically explore the relationships between dependent and independent variables. The data comes from a sample of 75 multinational enterprises that invested in the manufacturing sector between 1994 and 2008. Findings – The results reveal that large firm size, extensive international experience and large market size lead to the choice of acquisition mode of entry, while high cultural distance, high country risk, high proprietary assets and incentives lead to the choice of greenfield mode in the context of Ghana. Research limitations/implications – The results imply that the different economic, business and legal (locational) conditions of developing countries create different FDI strategies and paths of companies compared to developed markets. Practical implications – Policy makers in developing countries should make efforts to improve market size, the institutional and regulatory environment, as well as the availability of human capital in order to attract FDI. Originality/value – FDI studies have mainly analysed establishment mode strategies of firms in advanced markets. There is an increasing amount of research on FDI in emerging markets but very little on developing countries and African markets. Therefore, this study enables the authors to develop implications for existing theory and generate practical implications for firms and policy makers related to African and developing country markets. Keywords Africa, Developing countries, Ghana, Eclectic paradigm, Establishment mode, Foreign direct investment

Factors Influencing Indian Firms Decision Making in Foreign Direct Investment in Africa

International Journal of Applied Business and International Management, 2018

India’s economic progress and relations with other developing regions have received much attention, particularly the way in which Indo-African relations have evolved since 2000. This paper aims to put Indian FDI in Africa into perspective and provide some answers on the nature and possible impact of these flows to the continent. The study utilized the international typology offered by Dunning OLI paradigm to identify the important of Location Specific Advantages and how these advantages leads to selection of location for investment purposes by investors The study findings demonstrated that potential market growth, market opportunities and consumer base are the important indicated Indian firms targets Africa to seek new and unexplored markets of Africa. Competitiveness climate is important determinant along with economies of scale, investment incentives and availability of natural resources.

Characteristics and performance of Japanese Foreign Direct Investment in Africa

International Journal of Economic Policy in Emerging Economies, 2011

This paper examines the characteristics and performance of Japanese foreign direct investment in Africa. A large sample of 1062 Japanese subsidiaries in Africa was analysed. Our findings reveal that: • efficiency and market seeking was the common purposes for Japanese firms in Africa • the Japanese subsidiaries are young and small in lower middle income region, young and large in upper middle income region and old in low income region; their performance is good with a very high exit rate in low income region, high with high exit rate in low middle income region and moderate with a low exit rate in upper middle income region.

The Location Choice of Foreign Direct Investment and Economic Development in Africa

International Journal of Economics and Finance, 2021

Foreign Direct Investment (FDI) inflow to Africa has unevenly distributed investment location choices of multinational enterprises because of some exogenous economic factors associated with the locations, which vary across countries in Africa. The data used in the paper comes from Financial Times, World Bank, African Development Bank. This paper investigated what determines the location choice of FDI inflow to Africa using data on 3,768 firms from 88 countries making location choices in 54 African countries using a multicategory logistic regression. The findings show that: (1) the natural resource seeking enterprises invest more in landlocked countries relative to manufacturing and tertiary sector; (2) the natural resource seeking firms are less concerned about local market size and location’s economic condition comparing to manufacturing and service industries; (3) despite the accusation against the multinational enterprises (MNEs) for exploiting Africa’s natural resources, most of...

Foreign Direct Investment: A Study of the African Determinants

2019

This thesis explores the determinants of foreign direct investment (FDI) to Sub-Saharan Africa (SSA) compared to other developing regions, with an emphasis on risk. Estimation results from cross-section regressions using OLS and panel regressions, comparing 2003-2017 to 1988-1997, indicate the following. (1) The determinants identified in the 1990's no longer result in the best performing model in explaining the variation in FDI as % of GDP. (2) Africa is no longer in a less favorable position in attracting FDI compared to other developing regions. More importantly, an analysis on risk premium changes shows that (3) a reduction in the required risk premium related to SSA is consistent with the results in (2) and one explanation to why we observe changes. Hence, our results indicate that the required risk premium associated with investments in SSA has been lower for the last couple of decades than what it was previously.

Foreign Direct Investment in the Sub-Saharan Africa: Unveiling the Pains and Gains of Domestic Firms

Asian Journal of Economics, Business and Accounting

This study aimed at unveiling the pains and gains of domestic firms towards Foreign Direct Investment in the Sub-Saharan Africa. The objectives of the study were to ascertain the effect of inward Foreign Direct Investment on Domestic Firms, and to establish gulfs between gains and pains of Domestic Firms in Sub-Saharan Africa relative to technology spillover, competition, environmental degradation and Global Value Chains. The study used a systematic review. This enables the drawing of experience, ideas, and similar situations of others. Search strategy was incorporated to enable the searching of literature in database of reputable journals. It was discovered that the volume of Foreign Direct Investment is high in Sub-Saharan Africa, and that it has greater positive effect on Domestic Firms. It was established that Foreign Direct Investment presents gains as well as pains to Domestic Firms in Sub-Saharan Africa relative to technology spillover, competition, environmental degradation ...