The African Growth and Opportunity Act and growth in sub‐Saharan Africa: A local projection approach

The African Growth and Opportunity Act (AGOA) is intended to increase exports and economic growth in sub‐Saharan Africa by providing trade preferences to eligible countries. While previous research has generally found a positive relationship between AGOA and exports, no previous research has investigated the relationship between AGOA and economic growth. We explore the dynamic relationship between AGOA and economic growth in sub‐Saharan Africa by applying the local projection method (American Economic Review, 95, 2005 and 161) to estimate impulse responses. We find that a country's becoming eligible for AGOA preferences is associated with higher growth rates in the future, but that this effect may not be immediate, highlighting the importance of exploring the dynamic relationship between AGOA and growth.     

The internationalization of African firms: Opportunities,challenges, and risks

There has been a marked increase in the internationalization activities of African firms over the last two decades or so, resulting in the emergence of regional challenger firms that are aggressively competing with foreign multinationals in terrains historically dominated by the latter. However, our understanding of this phenomenon is limited, as empirical research examining the nature of internationalization of African firms is scarce, and research directly investigating drivers, outcomes, and boundary conditions of the internationalization of African firms is lacking. The goal of this special issue, therefore, is to contribute to the scholarly understanding of the increasingly prevalent internationalization of African firms. This guest editorial provides a summary of the six articles in this special issue, and highlights three broad thematic issues: internationalization opportunities for African firms (accelerated private‐sector development and regional integration, and ability to overcome institutional voids); internationalization challenges (global competitiveness challenges, limited management and cross‐cultural capabilities, and overcoming the liability of Africanness); and internationalization risks (losing focus on home markets and over‐internationalization).     

The internationalization of Nigerian firms: Motivations and location patterns

Despite the increased number of studies of the internationalization of emerging‐market multinationals (EMNCs), Latin American and Asian firms have dominated the focus of such studies, while the study of the internationalization process of sub‐Saharan African firms in the international business literature is quite limited. Therefore, this article examines the motivations and location patterns of the internationalization process of four Nigerian firms through a multiple case study approach. The findings show that the internationalization of the Nigerian firms is a recent phenomenon, but the foreign investment pattern reflects a pan‐African investment strategy. However, the findings also reveal that the firm‐specific advantages that had been accumulated in the domestic market, coupled with home‐country factors and regional‐/host‐market factors, were key determinants of the motivations and location patterns in the internationalization process of Nigerian firms.     

Political risk assessment by multinational corporations in African markets: A Nigerian perspective

Political risk assessment (PRA) is one of the determinants of foreign direct investment (FDI) and the competitiveness of multinational corporations (MNCs), yet little is known about its use in African markets. This study critically investigates the PRA techniques used by MNCs in Nigeria and their applicability. It uses a multimethod approach to analyze data collected from MNCs and the data set of the International Country Risk Guide (ICRG) PRA annual rating for Nigeria from 2011 to 2015. The findings reveal that most firms use qualitative, rather than quantitative, PRA techniques. Regional variations in the outcome of PRA within Nigeria could also contribute to the low use of quantitative techniques. This article identifies that firms are prepared to invest in Nigeria, in spite of high political risk, due to its economic and financial attractiveness. This article's findings offer some implications for practice with some suggestions on how it could influence firms’ internationalization and their conduct of PRA.     

Understanding cross‐border mergers and acquisitions of African firms: The role of dynamic capabilities in enabling competitiveness amidst contextual constraints

This article builds on existing international business literature that examines the drivers of cross‐border mergers and acquisitions (M&As) within emerging and developing economy contexts, theoretically exploring how dynamic capabilities (DCs) are connected to these drivers, and how African emerging multinational enterprises (EMNEs) can pursue them to achieve competitiveness. The article's contribution is the development of a DC framework and testable propositions for African EMNEs' cross‐border M&As. The theoretical framework shows the division of DC dimensions—sensing, seizing, and transforming—and establishes explanations for their linkage with institutional and resource drivers for African EMNEs' cross‐border M&A competitiveness. In addition, the article outlines managerial implications to this effect. Overall, the article contributes to the emerging literature on the international expansion of African EMNEs through cross‐border M&As by underscoring the role of DCs.     

Motives,choice of entry mode,and challenges of bank internationalization: Evidence from China

This study examines the motives, entry mode choice, and challenges of the international expansion in an emerging country context. Data were collected via interviews from 30 senior managers based on a sample of 10 Chinese commercial banks (CCBs) involved in international expansion over the period of 2001–2013. This study finds greenfield and mergers and acquisitions are the most popular foreign entry mode used by CCBs. The motives of emerging market banks’ internationalization appear to be intrinsically linked to market development to serve customers operating in overseas market, government policies, and strategic knowledge sourcing. In terms of challenges, the study finds lack of management resources/technical capacity, culture, adapting to the host country regulatory environment, and lack of experience to be the main challenges to bank internationalization.     

External Debt,Labour Productivity Growth and Convergence: Evidence from Sub‐Saharan Africa

Sub‐Saharan Africa (SSA) has long suffered from lagging productivity and excessive levels of indebtedness. Using both parametric and non‐parametric techniques, this paper examines the impact of external debt on labour productivity growth and convergence across SSA economies over the period 1970–2010. The results indicate the presence of debt‐overhang effects, regardless of model and sample specification. Debt reduction through the Heavily Indebted Poor Countries and Multilateral Debt Relief initiatives enhanced growth but was not successful in offsetting the debt‐overhang effects. Moreover, excessive levels of external debt were responsible for divergence in output per worker over the early 1990s. Although this trend was reversed over the 2000s, reduction in debt through the debt relief initiatives seems to have been insufficient in helping heavily indebted countries in SSA catch up with the labour productivity levels of the best‐performing economies in the region.     

A componovation perspective of innovation in emerging markets: Evidence from Indian organizations

In todays market landscape firms can effectively compete without the benefit of resource advantages, proprietary technology, or market power but by being more aligned towards creative combination and responsive innovation. This study approaches the concept of componovation from the composition based view (CBV) developed by Luo and Child. The CBV emphasizes how firms with ordinary resource endowments can achieve outstanding results through the creative use of open resources and unique integrating capabilities that result in an enhanced speed and a value‐price ratio that are well suited to large numbers of mass market consumers. Thus componovation is a new approach aimed at innovation in emerging markets.     

Solar Energy in Sub‐Saharan Africa: The Challenges and Opportunities of Technological Leapfrogging

For decades, Africa was generally perceived as the dumping ground for obsolete technologies. In recent years, technological leapfrogging, which is associated with the newly industrialized economies in Asia, has transpired in some key industries. In this article, we present the solar photovoltaic industry as one such industry and an integrated model of scaling up solar technologies. We identified five unique models aimed at scaling up solar energy in Africa: state‐led, nongovernmental organization and other agency–led, emerging‐market multinational enterprises–led, Avon, and pay‐as‐you‐go models. Our analysis focused on four countries in particular (Ghana, Nigeria, South Africa, and Kenya) and Africa in general. Despite the promising opportunities of this industry, a number of factors such as high up‐front capital costs and limited end‐user financing schemes have limited the technological process. We conclude by outlining the implications of the findings for theory and practice. © 2014 Wiley Periodicals, Inc.     

Infrastructure Development and Regulatory Reform in Sub‐Saharan Africa: The Case of Air Transport

This paper analyses the main policy issues raised by regulatory reform in air transport in sub‐Saharan Africa. Its basic premise is that improving ait infrastructure is of paramount importance for the region as it tries to integrate more thoroughly into the world economy. On the basis of the experience of OECD countries with privatisation, liberalisation, and regulatory design, the author analyses progress being made in sub‐Saharan Africa and identifies three important case studies: the restructuring of the regional airline of Francophone Western Africa, the sell‐off of the state‐owned airline of Kenya, and the overall reform process in South Africa, by far the largest market in the sub‐continent. The analysis highlights the importance of regional dynamics in the upgrading of the air transport industry in developing and emerging areas. Sub‐Saharan Africa has made smaller progress in this respect than, for instance, Central America. As the start of the Millennium Round and the first WTO air transport review approach, these issues will gain policy priority for all countries, and may become powerful bargaining tools for non‐OECD countries to press for more open access into OECD markets for the South's traditional exports.     

Aid,growth and institutions in Sub‐Saharan Africa: New insights using a multiple growth regime approach

Numerous sub‐Saharan African countries depend heavily on foreign aid. This paper explores the impact of foreign aid on economic growth in the continent using a finite mixture model. Contrary to previous studies, we hypothesise that the effect of aid on growth differs across groups of countries with similar but unobserved characteristics. The paper incorporates the potential presence of hidden heterogeneity and tries to explain group membership of countries by using various metrics of institutional variables. Focusing on a sample of 25 countries, we find that the impact of foreign aid on growth differs across three different groups of countries. Moreover, we find that aid works best in countries with effective government, good regulatory quality and low corruption. The results are robust to a battery of robustness checks. The paper underlines the importance of incorporating the heterogeneity in growth process in studies on aid effectiveness and provides evidence that sub‐Saharan African countries should undertake deep governance reforms to benefit from foreign aid.     

Why not accounting and finance: An African American perspective

The authors investigated the role of influence factors and information sources why African Americans choose or do not choose a career in accounting or finance. The most important factor was career-based occupational growth. Students were more deeply influenced by information on the university's website than any other media source. The findings will provide useful insights for the university's administrators, and accounting and finance professional bodies in formulating strategies to promote accounting and finance careers.     

The Transitioning of Marketing Practices from Segment to Customer-Centric Marketing in the African Business Context: Toward a Theoretical Research Framework

ABSTRACT

Although marketing has long been posited to be shifting from segment marketing to customer-centric marketing, there is little theoretical insight into the status of such transformation, especially in emerging African economies. Therefore, this paper develops an integrated theoretical framework for assessing (a) the extent to which firms in African economies use the segment marketing mix (4Ps) versus the customer-centric marketing mix (4As) as well as (b) their antecedents and performance outcomes. Propositions drawn from qualitative data and theoretical tenets in strategic management and in institutional theory are offered to guide systematic empirical research.     

Making theory and practice in subsistence markets: An analytic autoethnography of MASAZI in Accra, Ghana

This paper responds to the need for greater research in subsistence markets that engage new and innovative approaches to scholarship, in particular those that involve initiatives based on interactions between scholars and communities. On the basis of an analytic autoethnography conducted at a social venture in Accra, Ghana, the author empirically explores third space, or third space at work. Third space is defined as a momentary space between one's day-to-day world and other worlds. Building on recent literature that argues for a conception of third space that is less temporary and that allows one to be both here and there, this study uses blending, resistance, and negotiation to demonstrate the on-going making of theory and practice. The study also reveals that third space at work may occur on a continuum of in-betweenness and may be shared. The findings are relevant to scholars, practitioners, and global citizens.     

Regulation,Outreach, and Sustainability of Microfinance Institutions in Sub‐Saharan Africa: A Multilevel Analysis

The paper examines the effect of regulation on microfinance institutions’ (MFIs) sustainability and outreach in Sub‐Saharan Africa (SSA). Using unbalanced panel data from 2002 to 2012 for 30 countries and a multilevel estimation technique, we find that regulation helps improves the sustainability and breadth of outreach but not the depth. We also find that MFIs that accept deposits have better sustainability but tend to serve the marginal poor. Finally, regulatory quality has a positive impact on outreach and sustainability. Overall, the paper casts new light on the contribution of regulation to the dual objectives of microfinance.     

Marketing strategy in emerging markets: a conceptual framework

Citing difference between emerging and developed markets, scholars highlight need for different approaches to marketing in emerging markets. In this paper, we argue that while there are some unique characteristics of emerging markets, all countries within emerging markets do not have similar levels of product penetration and consumption. As a result, it is wrong to assume that emerging markets are untapped and under-served across the product categories. To a list of characteristics identified as unique to emerging markets, we add large population as an important characteristic and discuss its strategic implications. We develop a conceptual framework that factors in combined effect of varying degrees of product penetration & consumption levels with large population of emerging market countries. The conceptual framework identifies four strategic alternatives for marketing in emerging markets. Instead of recommending any generic marketing strategy, we propose that marketers need to choose an appropriate mix of strategies aimed at primary and selective demand creation in emerging markets.     

Trust and the don't‐want‐to‐complain bias in peer‐to‐peer platform markets

This paper addresses peer‐to‐peer (P2P) digital platform markets, often associated with the “sharing economy” or the “collaborative economy”. Such digital platforms, facilitating new purchasing channels for consumers by matching P2P supply and demand, can be considered new market places challenging the conventional markets. How are P2P platform markets evaluated by the consumers? Based on a comprehensive survey‐data material, five different P2P service markets are considered by peer buyers and the results compared to consumers’ evaluations from similar conventional service markets according to trust, comparability and consumers’ satisfaction with the transactions. Comparability seems to be one advantage for the platform markets, while trust could become a problem. Conditions for trust in P2P platform markets is particularly interesting to study because contrary to conventional markets P2P transactions cannot rely on governmental laws, regulations and security net. This trust problem has been solved by a trust‐generating rate and review system. Our data material, however, distinguishes a mechanism that we have coined as the don't‐want‐to‐complain bias. More precisely, people do not like to complain, hence buyers of P2P services often hesitate to give negative ratings when they are discontent with a service or a supplier. Therefore, positive ratings become overestimated. If consumers recognize this bias, ratings and reviews will lose credibility and no longer be considered trustworthy. Eventually, this may threaten the well‐functioning of P2P markets.     

The nature and determinants of comovement between developed,emerging and frontier equity markets: Europe versus Asia‐Pacific

International investors are increasingly attracted towards emerging and frontier markets because of their potential to enhance diversification benefits of a global portfolio. This calls for a rigorous analysis of the nature and determinants of stock market comovement between developed, emerging, and frontier markets in Europe and Asia‐Pacific regions. The findings suggest that unlike their Asia‐Pacific counterparts, European developed, emerging, and frontier stock markets display a higher degree of comovement. Although Asia‐Pacific frontier markets provide good diversification opportunities, investors must be cautioned against their weak financial system. The volatility of returns, gross domestic product growth rate, and the 2008 global financial crisis (GFC) are the key determinants of stock market comovement in Europe. The mechanisms by which comovement in the Asia‐Pacific region is strengthened differ across markets. Comparative analysis of comovement and its determinants across different classes of equity markets and geographies is expected to provide valuable perspectives to global investors, portfolio managers, and policymakers.     

Dimensions of expatriates adjustment in distant subsidiaries: A field study of a sub‐Saharan African institutional distance

The aim of this study is to investigate the determinants of expatriates’ adjustments in distant and complex multinational subsidiaries. Using the institutional theory as a basis for expatriates’ assignments in complex subsidiaries, the work employed a sequential mixed methodology of data collection. An in‐depth face‐to‐face interview with 21 senior expatriate executives and a quantitative survey of 204 expatriates working in various multinational subsidiaries in Ghana served as data for the work. Consequently, a structural equation modeling (SEM) and a content analysis were the basis of the data analysis. Findings showed host country culture plays a significant role in determining expatriate adjustment in distant subsidiaries. Findings also showed expatriates’ competence in cross‐cultural communication significantly determines expatriates’ adjustment in distant subsidiaries. The work recommends an intensive training of expatriates in cross‐cultural communication and host cultural values and behaviors for international assignees.     

Mapping the impact of home‐ and host‐country institutions on human resource management in emerging market multinational companies: A conceptual framework

While there is a growing literature concerned with multinational companies from emerging markets (EMNCs), it does not contain a robust conception of how institutions shape human resource (HR) practices in such firms. We contribute to filling this gap through developing a framework of how institutions create a range of constraints and opportunities for EMNCs. Specifically, our framework contains three key elements of how MNCs from emerging markets interact with institutions: EMNCs develop approaches that to some extent reflect the perceived strengths and weaknesses of the institutions in the home country (institutional conditioning); the strategies of actors in EMNCs can overcome the weaknesses of the home country by drawing on institutions in other countries (institutional arbitrage); and the actions of EMNCs can reinforce, or create pressures for change in, the institutional context in the countries in which they operate (institutional change/consolidation). By mapping this set of strategies of EMNCs, we contribute to a fuller understanding of the relationship between institutions and HR practices, and we outline how the rise of EMNCs reshapes the global landscape by adding new kinds of firm behavior to capitalist diversity.