Internationalisation of African EMNEs

(1)

Internationalisation of African EMNEs

Master Thesis

MSc. Business Studies – International Management Supervisor: Dr Johan Lindeque

Second reader: Dr Lori Divito Student: Filippo Benetello Student ID: 10993118

(2)

2

Abstract

This thesis investigates the internationalisation process of African multinational corporations through the lenses of the three pillars of the OLI model. The broader theme being the study of characteristics of a modern phenomenon: multinational enterprises coming from emerging markets. A qualitative research and analysis is carried out in order to investigate the strategy adopted by four South African multinationals when carrying out foreign direct investments. Contrasting evidence is found on the origin and utilisation of competitive advantages on the international market. However the findings point to some similarities with other multinationals form emerging markets, namely: rapid internationalisation through the use of acquisitions in both developed and developing countries. Partial evidence also supports the notion that the motivation behind the investment affects the decision of the location. Finally, even though it is not one of the variables studied here, industry effect emerged as a key variable affecting the internationalisation strategy adopted by African multinationals.

Keywords: [internationalisation; African; OLI model; emerging markets; foreign direct investment; acquisition]

(3)

3

Statement of Originality

This document is written by student Filippo Benetello who declares to take full responsibility for the contents of this document.

I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating

it.

The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

(4)

4

Acknowledgements

First of all I would like to thank my parents for giving me the chance of studying abroad, this experience has been truly enriching. They are one of my greatest motivations to good in my life and have always pushed me to strive for more. Moreover I owe to them the person I am today and I will never thank them enough for

their sacrifices to allow me to carry out my studies.

I would also like to thank Johan Lindeque for making me passionate about international strategy and being an excellent thesis supervisor. It is rare nowadays to

(5)

5

Index of Tables and Figures

TABLE 1 – Characteristics of EMNEs………..….15

TABLE 2 – EMNEs (cases) chosen and relative information………....38

TABLE 3 – Database research strategy summary………..42

TABLE 4 – Sasol’s Initial creation of FSAs……….….46

TABLE 5 – Sasol’s Summary first 10 FDIs……….…..48

TABLE 6 – Sasol’s summary locations and rationales of FDIs………...49

TABLE 7 – Sappi’s Initial creation of FSAs………..…53

TABLE 8 – Sappi’s Summary first 10 FDIs………...54

TABLE 9 – Sappi’s summary locations and rationales of FDIs……….55

TABLE 10 – MTN’s Summary first 10 FDIs……….58

TABLE 11 – MTN’s summary locations and rationales of FDIs………..….60

TABLE 12 – Dimension Data’s Summary first 10 FDIs………..…..62

TABLE 13 – Dimension Data’s summary locations and rationales of FDIs………..……63

TABLE 14 – Summary main elements of internationalisation strategy of the 4 EMNEs………..67

(7)

7

1. Introduction

In recent years, due to a multiplicity of factors, we have witnessed the rise of many markets that were before considered irrelevant in the world economy, such for example, the latest and least researched market: Africa (Nkomo et al., 2015). Moreover, many multinational enterprises (MNEs) are realizing that Africa can represent a good opportunity for the future (Berman, 2013). Not only in terms of natural resources to exploit, but also as a growing unexplored market where there is a vastly growing labour and customers pool (Chironga et al, 2011). “Over the next 20 years, as infant mortality and fertility rates decline, sub-Saharan Africa will become the main source of new entrants into the global labour force” (IMF Regional Economic Outlook, 2015). The African countries were not affected directly by the financial crisis that hampered the economic stability of many developed nations (African Development Bank, 2009). Nevertheless, the potential of this continent is still overlooked too often (McKinsey Global Institute, 2010). More and more researchers and experts are turning their attention to Africa, but this remains at an initial phase (Nkomo et al., 2015). The number of academic articles regarding International Business (IB) in or from Africa is very low, and the papers on strategy of businesses in or from Africa are even fewer (Zoogah et al., 2015). This thesis aims to start shedding some light on this huge gap in the IB literature by looking at some successful South African MNEs and their internationalisation strategy. These MNEs coming from emerging markets, such as South Africa, are often termed EMNEs (Luo & Tung, 2007; Ramamurti & Singh, 2009; Madhok & Keyhani, 2012), and will be called such in this thesis.

The investigation will be done by analysing the internationalisation path of these focal EMNEs through the lenses of the three sub-paradigms of the OLI

(8)

8 framework: ownership, location, and internalisation (Dunning, 2000). The aim is to have a better understanding of the underlying mechanisms of the internationalisation of African EMNEs, and more generally of all EMNEs, by answering the following research question:

How well does the eclectic (OLI) paradigm help us understand the internationalisation of South African EMNEs?

The application of the OLI framework not only allows the study to address the gap with regards to the internationalisation of African EMNEs empirically, but also to address a theoretical question about the degree to which extant IB theories apply to EMNEs.

In order to answer the research question, it was adopted a multiple-case analysis in line with Eisenhardt (1989) and Eisenhardt & Graebner (2007). The seminal literature of Yin (1984; 2003; 2009) on case analysis was consulted in order to make sure that the data was collected, and analysed, in a scientific way. This also allows for the results to retain solid validity (construct, internal, and external) and reliability. The data used in this thesis is mainly qualitative, and presented through a narration of the stories of the firms investigated, concentrating on the main events and strategic decisions of interest (Kolk et al., 2014). The analysis include both a within and cross-case analysis. This last was fundamental in order to show the overall similarities and differences emerged in the internationalisation strategies of the EMNEs analysed.

The final results yield support in favour of the validity of the OLI model to analyse the internationalisation of EMNEs. In particular it seems like it could be very useful to understand the limits of the applicability of extant theories to the

(9)

9 internationalisation of MNEs. Moreover the research shows evidence that African EMNEs are very similar to their counterparts around the world in terms of using acquisitions to internationalise rapidly and not following a gradual expansion. However there seem to be differences on the origin and utilisation of Firm Specific Advantages, which should definitely deserve further investigation.

The remainder of the thesis will proceed as follows. Firstly the African continent will be introduced to the reader as the general context in which this thesis will develop its analysis. Then the thesis will proceed to describe the main characteristics of the actors that will be analysed within the African context, i.e. EMNEs. These two sections set the boundaries of the scope of interest of the research that will be carried out. The next step will be to develop working propositions while analysing the extant literature of interest. Subsequently the methodology applied to carry out the qualitative research of this thesis will be presented. After these two sections the reader should have a clear idea of the theoretical framework on which the research is based, and the steps that will be taken in order to perform the qualitative analysis. The following sections will present the study of the four companies chosen to verify the working propositions, firstly by looking at individually at each of them, and secondly the overall similarities and differences will be presented in the cross-case analysis. After this, it will be the time to present the actual results of the qualitative analysis by seeing how they fit in the theoretical framework previously developed. Finally this thesis will present the overall conclusions on the research that was carried out, the limitations of it, together with suggestions for future research, and the managerial implications of the same.

(10)

10

2. Contextual Background: The African Context

“One important part of the world – Africa – has essentially remained off researchers’ radar” (Zoogah et al., 2015, p.7). This means that the business literature has a huge gap when it comes to the understanding of the firms operating into, and expanding from, this continent (Nkomo et al., 2015). While it could have been reasonable until a decade ago, recent years have shown that Africa has not lost its hopes to develop, and that they could actually manage to do so in the not so far future. The Economist (2013) Group says that in recent years there has been re-found hope for Africa’s development, and actually predicted in 2013 that of the twenty fastest growing economies of the next five years, seven of them would be African. The McKinsey Global Institute predicts that by 2020 Africa’s consumer spending will be of $1.4 trillion (McKinsey Global Institute, 2010). Moreover, a recent report shows that the quality of life in Africa has increased in the last decades, for example: extreme poverty has been halved, average life expectancy increased, progress has been made in stemming serious diseases such as HIV/AIDS, fewer women die of childbirth, and more children survive to their fifth birthday (Africa Development Bank Group, 2014).

Nevertheless, as with all emerging economies, Africa has been described as being characterized by ‘institutional voids’, such as for example the lack of market-supporting institutions and contract-enforcing mechanisms (Khanna & Palepu, 1997). In addition to this, Ofori-Dankwa & Julian (2011) portrayed Africa as also lacking factors of production, especially human capital, physical capital, and financial capital, and have therefore coined the term ‘double void contexts’ to describe the institutional and business environment in the continent. The financial void is beginning to be filled with the establishment of financial service firms and banks in the main economic centres (Financial Services in Africa, 2013) and the physical capital will hopefully

(11)

11 come as a consequence as more investments are possible. As the human capital is concerned, it is also up to us, the ‘Western world’, to help them start building knowledge that can be helpful for them now and in the future (Nkomo et al, 2015). There is a lot of potential in Africa, but it has to be managed well in order to produce long-term positive results. Probably also for this reason there have been several calls to expand the IB research on this continent, by both researchers and field journals, such as the Global Strategy Journal (Global Strategy Journal, 2015). In addition to these calls there has also been the recent formation, in January 2014, of the Africa Journal of Management, which has as one of its rationales “the need to increase the publication and dissemination of management knowledge focused on Africa” (Nkomo, et al. 2015, p.9). All of this indicates that there is a renewed interest for Africa and its role in the global economy, and there are no reasons why this should not be the case.

MNEs coming from Africa can be clearly categorized as Emerging Multinational Enterprises, EMNEs. We could argue that there is also a distinction between ‘developing’ and ‘underdeveloped’ countries, or other terms used to describe different points of economic development, but this is not the issue here. The key point here is that there are some firms that were incorporated in Africa, and now operate internationally, quite often also going outside the boundaries of their home continent (McKinsey Global Institute, 2010). A report by the Initiative for Global Development (2011) showed that while the S&P’s 500 biggest American firms constantly reported negative growth in the period from 2006 to 2009, in the same years the MNEs based in sub-Saharan Africa grew at an almost constant annual rate of 30%. This suggests that we should study more in depth how these firms operate, since they will also affect our economies more and more. One of the fundamental questions researchers are asking themselves is how to best theoretically frame the internationalisation strategies of

(12)

12 these EMNEs (Mathews, 2002; 2006; Luo & Tung, 2007; Cuervo Cazurra, 2007; Ramamurti & Singh, 2009; Madhok & Keyhani, 2012). The answer to this question is still unresolved, although in my opinion we should probably start from what we already know, and maybe extend or modify current ideas in order to better fit them to this unknown environment. I believe that using context free frameworks, and adapting them to this particular context, would be a great way to start having a better understanding of how business is carried out in Africa.

If we look at the African economic landscape it is clear how a great number of well-performing African MNEs, and foreign MNEs operating in Africa, operate in the extraction, working, and export of natural resources (mainly gas and oil), and how many countries rely heavily on them as steady flow of income (KPMG Global Energy Institute, 2014). Nevertheless, in recent years there has been a decisive improvement of the service sector and companies are also realising that there is a huge unexplored market of consumers in Africa (Chironga et al., 2011). This is why there are several companies operating in the service sector that are expanding more and more in the continent (eg. Standard Bank, Safaricom, MTN, Nation Media Group). The biggest African firms at the moment, excluding those that operate in the extraction and working of natural resources, are in the banking, retail, and telecommunications sectors, but more are developing (McKinsey Global Institute, 2010). An example that also foreign MNEs have a newly realised interest in Africa is the majority acquisition by Walmart, finalised in 2011, of Massmart Holding Limited, which is the second-largest consumers’ goods distributor in Africa.

(13)

13

3. Conceptual Foundation: Theorising African EMNEs’ Strategy

It is clear, from the section above, that the African context is a very particular one for firms to operate in. Nevertheless that can be said for every different context possible, none of them will be perfectly identical, for several different reasons. This notion can be perfectly captured by the title of the article by Mellahi and Mol (2015): “Africa is like every other place, in that it is unlike any other place”. It is exactly for this reason that I chose to use a context-free framework for my research: in order to reach a conclusion that can be generalizable for all the set of EMNEs that operate, and will operate, in the global market.

This section of the thesis will start with a conceptualization of EMNEs, in order to understand the actors that we are studying. The subsequent part will explain the OLI (eclectic) paradigm and its role as envelope for other IB theories. It will then proceed with a description of the theories utilised to fill the empty sub-paradigms of the model (OLI: Ownership, Location, Internalisation) (Dunning, 2001), and that will be used in order to analyse the internationalisation behaviour of EMNEs.

3.1 African MNEs as EMNEs

During the 80’s and 90’s the world witnessed the gradual liberalisation of many national markets that were previously under the protection of the state (Ramamurti & Singh, 2009). In recent times we also witnessed the establishment of an always-increasing number of multilateral international trade agreements (eg. WTO), and bilateral or regional preferential trade agreements (eg. NAFTA) (Mansfield & Reinhardt, 2008). All of this was accompanied by a technological revolution without precedent that drastically reduced the costs of many operations for firms and connected one end of the world with the other (Garret, 2000; Ramamurti & Singh, 2009). All of these factors combined created a ‘flattening’ of the world economy and deepened the mutual relationships

(14)

14 between countries, i.e. globalisation (Garret, 2000). On one hand the liberalisation of the markets enabled MNEs form the ‘North’ to tap into the low-cost labour, and raw materials of the ‘South’ of the world and set up what became to be known as Global Value Chains (Luo & Tung, 2007, Ramamurti & Singh, 2009; Gereffi, 2014). On the other hand it allowed firms from the developing countries, which had recently opened their markets to the world, to become part of the production chains of big MNEs and observe how they operate internationally (Luo & Tung, 2007). This prompted many firms from these newly liberalised markets to also pursue internationalisation: they understood the potential of expanding their operations beyond their national border.

In subsequent years we have witnessed the rise of many companies from emerging markets that operate internationally, i.e. EMNEs, that have contributed to a profound shift in today’s economy (UNCTAD, 2005). These firms started without the necessary capabilities to compete with more mature and established MNEs, but were still able with time to become competitive, and in some cases to even become leaders of their markets (Mathews, 2002; Ramamurti & Singh, 2009). It is this general phenomenon that captured the attention of many researchers (Cuervo Cazurra, 2007; Luo & Tung, 2007; Madhok & Keyhani, 2012; Mathews, 2002; 2006; Ramamurti & Singh, 2009) and is the topic of this thesis. EMNEs are a very heterogeneous group, with different stories, different structures, different strategies, etc., just like normal MNEs (Ramamurti & Singh, 2009). Nevertheless it is important to understand some of the underlying mechanisms in order to expand our understanding of the world market. Just like it was, and still is, done with mature MNEs. Most of the empirical research on the internationalisation of EMNEs has been carried out analysing firms coming from the Asia-Pacific (Luo & Tung, 2007; Mathews, 2002; 2006) or South America (Cuervo Cazurra, 2007), but very few have analysed African EMNEs. I believe there

(15)

15 should be more studies of African firms in order to then be able to insert them into global studies of emerging markets, such as the one carried out by Ramamurti and Singh (2009), and draw global similarities and differences. This would allow us to better understand their way of doing business, find similarities and differences with the one adopted by more ‘traditional’ firms, develop new theories, and most of all learn from their experience. Nevertheless we should take one step at a time, starting with obtaining a deeper knowledge of the African firms. Before proceeding with this study on the internationalisation of African EMNEs, it is conceptually important to define what this thesis defines as EMNEs: the characteristics are presented in Table 1. TABLE 1 – Characteristics of EMNEs

1. They originate in a country that is economically developing, and usually their home market was protected (completely or partially) from global trade when the original firm was incorporated. This entails that they had the opportunity to grow their presence in their home market without too much interference from foreign MNEs (Mathews, 2002; Cuervo-Cazurra, 2007; Ramamurti & Singh, 2009). 2. Even though they operate well in their markets and in similar ones (neighbouring,

culturally similar, and usually less developed countries) they rarely possess the traditional firm-specific assets (FSAs) to compete internationally (e.g. technological advantage, powerful brand, marketing experience, advanced R&D) with established MNEs. Especially in long-established and developed markets (Mathews, 2002).

3. They are “latecomer firms” (LCF) in the global market, which is different from late movers. The latter is a strategic choice to enter a market; the former is an imposed condition. This entails that they aim to catch-up as soon as possible with more established MNEs in their industry (Mathews, 2002).

4. They have some kind of country specific advantage (CSA), or more than one, in terms of factors of production in their home market (either in the form of labour, natural resources, or government incentives) or some kind of “country of origin” advantage. This CSA, or CSAs, allowed them to grow in the first place, and are relied on particularly also during the first period of internationalisation (Ramamurti & Singh, 2009).

(16)

16 5. The institutions in their home market are not evolved as we usually find them in Western markets; therefore they are used to deal with weaknesses in the institutional framework (e.g. corruption, weak contract enforcement, non-linear judiciary system, etc.).

6. They started their internationalisation process in a much ‘flatter’ world than it was when the competing, established MNEs did (Ramamurti & Singh, 2009).

The list of characteristics in Table 1 is intended to create a clear conceptualisation of the entities that this paper defines as EMNEs. Moreover, it clarifies the differences between EMNEs and MNEs. Another important aspect of this conceptualisation is that it captures a great majority of the EMNEs around the world, including of course the African ones. The characteristics are taken from the analysis of other studies (Mathews, 2002; 2006; Cuervo-Cazurra, 2007; Ramamurti & Singh, 2009). All of this is done in order to be able to compare the final results with the existing literature, and contextualise the findings in the broader context of studies of EMNEs. The question then is: is the internationalisation process of these firms similar to the one established MNEs had in the past? This thesis will argue that it is indeed similar for certain aspects.

3. 2 Internationalisation of EMNEs

While the investments in less developed and in equally developed countries has been analysed often, the theoretical knowledge on FDI from less to more developed countries is very scarce (Ramamurti & Singh, 2009). Part of this explanation is attributable to the fact that IB, as a serious discipline, was born only in 60’s, when many firms had already become MNEs. In addition to this, many of the experts studying IB and great part of the businesses studied came from the US and Europe. At that point in time the phenomenon that was of interest was the expansion of MNEs in less developed countries (for cheaper raw materials and labour) and in other developed countries (Madhok & Keyhani, 2012; Ramamurti & Singh, 2009). Not surprisingly the

(17)

17 dominant theories on outward investments and internationalisation of firms come from the study of MNEs coming from developed market (Madhok & Keyhani, 2012). Notable examples of this are: the product life cycle framework (Vernon, 1966), the internalisation theory (Buckley & Casson, 1976), the incremental internationalisation model (Johanson & Vahlne, 1977), the OLI model (Dunning 1958; 1988; 2000). This is to say that there is relatively much less knowledge about FDIs from less developed economies than there is on the same type of investments from developed countries (Madhok & Keyhani, 2012; Ramamurti & Singh, 2009).

The broader question is whether EMNEs are expanding their global presence in a similar way their established counterparts did in the past, and therefore whether or not the theories developed in the past are still useful today (Ramamurti & Singh, 2009). The important thing to keep in mind here is that the two waves of MNEs came about in two very different times in history (Ramamurti & Singh, 2009), and therefore there will be some differences in how they internationalised. Nevertheless we should set aside the dissimilarities dictated by the different point in global history and look at the underlying mechanisms that are in function when a firm internationalises. Keeping this in mind, I believe that some of the theories developed in the past can help us understand this new phenomenon. It must be said though, that the theories that will be majorly useful are the context-free ones. This is because the context in which a firm operates changes constantly through time, and because EMNEs all come from different contexts with particular characteristics. If the desire is to better understand the overall internationalisation strategy of EMNEs, we must detach our analysis from specific variables and concentrate on the observable general patterns. For this purpose this thesis employs the OLI model, which was developed by J.H. Dunning over two decades ago and then improved during the years, to assess the internationalisation of

(18)

18 EMNEs. The next section will describe how this framework is conceptualised in this paper.

3.3 OLI model applied to African EMNEs

Good theories can be developed in two ways: either by informing existing theories, or by building new ones (Colquitt & Zapata-Phelan, 2007; Corley & Gioia, 2011). This thesis will inform the OLI model by applying it to MNEs operating in a very different world to the one during which it was first advanced. Even though it will be a replication of an existing theory, therefore generally not regarded as adding much towards theory building (Tsui, 2004), in this case precautions will be taken to ensure a sound theoretical contribution. The aim is not to modify an existing theory, but rather to see whether the OLI model can be applied also to understand the modern internationalisation process of African EMNEs, and of EMNEs in general. Therefore it can be seen as a validation of the OLI model. Nevertheless, in this case there is the double advantage that if this framework can be applied to African EMNEs, it also means that the underlying mechanisms of the internationalisation process of African EMNEs, and in general all EMNEs, are similar to those studied in the past. This would mean that we could start to make sense of their internationalisation strategy and also understand where there is the necessity of investigating more in order to understand EMNEs’ internationalisation better. The rest of this section will be devoted to the description of the OLI model, to its conceptualisation for this research, and to the development of the working propositions that will be tested.

3.3.1 Evolution of the OLI paradigm

While carrying out his Ph.D. thesis (Dunning, 1958) John H. Dunning noticed that there were some competitive advantages that were owned by specific firms that enabled them to operate better than others (Dunning, 2001). This entailed that there

(19)

19 were some factors that resided inside the firm that enabled it to perform better than its competitors. These were then labelled as Ownership (O)-specific effect (Dunning, 2001). Another element that was noticed was that the O advantages of the firm yielded different results depending on the country in which the firm operated. Dunning (1958) came to the conclusion that the location in which the firm, or subsidiary of it, was operating influenced the degree to which the O advantages could be exploited. This was labelled as location (L)-specific effect. Later on, in a paper he presented at the Nobel Symposium of 1976, he added a third factor, the internalisation (I) advantages. The latter was deemed necessary in “explaining the scope and geography of value added activities by multinational enterprises (MNEs)” (Dunning, 2001; p. 175). This was done so the framework could also explain why firms decide to create and/or exploit their O advantages, rather than to purchase and/or sell them, or their rights, on the market (Dunning, 2001). This tripod became to be known as the OLI (or eclectic) paradigm, and it has played an important role in advancing our understanding of MNEs and countries’ attractiveness for FDI. Finally in 2000, Dunning published a paper to answer some critiques about the framework and to show how it can be useful in connecting various economic and business theories. This is because it is essentially an empty envelope that can be filled with several different theories (one for each leg of the tripod) depending on the phenomenon of interest (Dunning, 2000). The rationale behind adopting an ‘open envelope’ is that no single theory is able of explaining completely the internationalisation mechanisms of an MNE (Dunning, 2000). Nonetheless, Dunning (2000) explains the benefits of combining some complementary theories in order to have a more holistic understanding of the changes in MNE activity; and this is precisely the aim of the OLI model. He also proposes that by carefully utilizing the appropriate theories it is possible to make the framework more

(20)

20 dynamic than what it originally was (Dunning, 2000). This would mean that it could still be usable and useful nowadays. This thesis will apply this framework to African EMNEs to see if it can be suitable to better understand their internationalisation process.

3.3.2 Ownership (O) sub-paradigm

The ownership (O) sub-paradigm states that a firm must internally possess some kind of distinct and sustainable competitive advantage, or a set of them, relative to its competitors in order to internationalise, and greater this advantage is, the more likely the firm is to engage in, or increase, foreign production (Dunning 2000). Since the firm owns it, it is termed a Firm Specific Advantage (FSA) in the IB literature (Birkinshaw et al, 1998). This notion is a very powerful one, since it poses the internal possession of some kind of competitive advantage as a necessary, even though not sufficient, condition for a firm’s survival in a foreign market (Birkinshaw et al, 1998; Dunning 1988). This in turn means that when EMNEs internationalise they must possess some kind of O advantage in order to compete with incumbents, otherwise their foreign subsidiaries will not survive in the medium-long run.

In the years, the competitive advantages of MNEs around the world have been widely studied since they represent the key to success of firms, what they have that others do not. Probably, the most common theory used to conceptualise the O advantages is the ‘resource based view’ (RBV) (Barney, 1991; Peng, 2001). This concept says that a firm must possess some type of Valuable, Rare, In-imitable, and Original (VRIO) resources in order to have a competitive advantage that lasts in the long run (Barney, 1991). The RBV though is more concerned with asset exploitation rather than with asset seeking FDI.

(21)

21 In order to render the RBV applicable to EMNEs, Mathews (2002) published an article called “Competitive Advantages of the Latecomer Firm: A Resource-Based Account of Industrial Catch-Up Strategies”. Mathews (2002) correctly argues that the RBV is good at explaining how firms sustain their competitive advantages, but it does not explain its creation, or how to compete with incumbents when having fewer resources available. His paper is based on the analysis of firms from the Asia-Pacific area that entered knowledge-intensive industries, and became important players. For our purpose it is very relevant because he gives an explanation of how latecomer firms (LCF) with scarce resources (compared to incumbents in the industry) are able to build their O specific advantages with time. Which is exactly the case of EMNEs. In Mathews’ (2002; 2006) perspective, LCFs should link with incumbents by taking over some of the work they outsource, leverage resources stemming from this relationship, and finally learn from this experience. Through iterated processes of linkage and leverage, the learning of the LCF should in turn expand each time (i.e. LLL model). From this reasoning two things might be deduced about EMNEs’ FDI in developed countries: first that they might enter these markets in order to become part of a value chain that can link them with more experienced counterparts, and secondly that acquisitions in developed market do not automatically imply an improvement in the knowledge base of the firm.

Knowledge is not easily transferable and, as Kogut and Zander (1992) say, its successful transfer depends on the acquiring firm’s capabilities to combine, integrate and reconfigure it with its existing knowledge base. Therefore it will require time before an EMNE can accrue some positive returns on acquisitions undertaken in advanced markets. Returning to the creation of FSAs by EMNEs, following Mathew’s reasoning, if a firm is able of working with/for an established MNE before of

(22)

22 internationalising, it should be able of developing FSAs to help the company overcome some insecurities when expanding abroad. This could be a very relevant factor also in explaining why, and how, EMNEs in general seem less scared to invest abroad than past MNEs. For this thesis I pose this element as a necessary condition for African firms to internationalise.

Working Proposition 1: African EMNEs will have had working relations with at least

one foreign, more established (in the industry) MNE foregoing any eventual FDI.

However, for a firm to be involved in business transactions with an MNE, it means that the firm possesses something that the MNE wants. When MNEs expand internationally they face liability of foreignness, which can comprise many aspects of carrying out business in a foreign country (Zaheer, 1995). In general this concept, fundamental in many theories of international expansion, refers to the fact that a foreign firm will face more obstacles than the local firms, due to the fact that it carries out business in an unknown, and foreign market (Zaheer, 1995). This notion is accentuated when the government imposes limits to foreign firms entering the country, or when one, or more than one, local company has the control of scarce assets. The pre-emption of scarce assets is one of the principal sources of first-mover advantage, and if well managed in can give rise to related FSAs (Lieberman & Montgomery, 1988). In studies regarding EMNEs (Mathews, 2002; 2006; Ramamurti & Singh, 2009) is possible to see how, very often, local firms in developing countries serve as a link for MNEs to access resources otherwise unavailable, or available at really high costs. To make a clear example of this, some of the CSAs of China are the access to a huge

(23)

23 market, and the availability of cheap labour (Bhaumik et al, 2015). In addition to this, if we go back some years, when China was almost completely closed to international trade, it was impossible for foreign firms to enter the market, and therefore many Chinese companies grew enormously by filling this gap. Lenovo can be seen as the perfect example of this strategy (Case Study: Lenovo, 2013). Having made this example, it is possible to argue that firms in developing countries develop FSAs based on their CSAs (Bhaumik et al, 2015).

Working Proposition 2 (a): African EMNEs create part of their FSAs by harnessing

particular home-country CSAs.

In the case of African countries, as mentioned at the beginning, probably the most valuable CSAs for traditional MNEs are the ones brought about by the abundance of natural resources (KPMG Global Energy Institute, 2014). For this reason I would expect a big majority of African EMNEs to have used natural resources, and the pre-emption of these, as source of competitive advantage.

Working Proposition 2(b): The majority of African EMNEs have created their FSAs,

at least initially, through the exploitation of natural resources.

3.3.3 Location (L) sub-paradigm

This sub-paradigm of the OLI model identifies the location chosen by a firm for its international expansion as a factor that on its own can improve, or deteriorate, the ownership advantages of the firm. In the case of the L advantages, the variables used to determine the benefits of a specific place “…- be they labour costs, tariff barriers,

(24)

24 the presence of competitors or agglomerative economics - rest on the tenets of one or other contextually related location theory, and also the assumption that firms will seek to site their value-added activities at the most profitable points in space” (Dunning 2001, p.177). In this case, the word “profit” is used not to indicate economic profit, but in a more general way to refer to the long-term objectives of growth of a firm. There is to say that none of the location theories are capable to fully explain the reasoning behind choosing one country over the other and for all the four types of FDI (Dunning 2000). This means that, as with the other three legs, it is up to the researcher to decide which theory would best suit the investigation of the phenomenon he is interested in.

Talking about location choice of EMNEs some researchers (Amal et al., 2013) maintain that for some aspects they comply with the internationalisation (Uppsala) model (Johanson & Valne, 1977). Other literature (Jain et al., 2013; Luo & Tung, 2007; Madhok & Keyhani, 2012) instead say that they do not; stating that EMNEs behave more opportunistically, in the sense that the decision on when and where to expand are dictated by various exogenous and endogenous factors, and do not necessarily follow a pre-determined structured path. Dunning (2000) also acknowledges that location is nowadays a more complicate decision than the internationalisation model advanced by Johanson and Valne (1977). Makino et al (2002) recently demonstrated the benefits of considering more than one factor (in their case firm’s resources and FDI motive) in analysing the location choice of EMNEs. Nevertheless we are still very far from understanding how EMNEs decide to locate in one country over the other.

Consider the argument had under the O sub-paradigm. If a local firm creates strong ties with foreign MNEs, usually from a much more developed country, then this should in turn reduce the psychic distance even with more advanced markets once the

(25)

25 firm wants to become international. “Psychic distance refers to the degree to which a firm is uncertain of the characteristics of a foreign market” (Rugman et al, 2011). This concept was introdced by Johanson and Vahlne (1977). The IB literature also suggests us that EMNEs feel confident in investing in other developing countries because they have much more familiarity with undefined market institutions than MNEs from developed countries. Another important factor that should reduce the overall psychic distance faced by EMNEs when investing abroad (independent of the country chosen for the FDI) is the ‘flatter’ world brought about by globalisation. As a result of the abovementioned arguments I suggest the following:

Working Proposition 3: African EMNEs will carry out FDIs in both developed and

emerging countries, with no incremental approach.

Presently there is no location theory specifically developed for EMNEs, but rather various studies trying to highlight paths of international expansion. In the IB literature, one of the traditional ways to compare possible locations for FDIs is by considering the raison d’etre of the investment, i.e. what it is the aim of the company’s investment. Regarding this topic, researchers have identified 4 main typologies of FDI (Dunning, 2000):

1. Market-seeking (MS) FDI: that with the scope of satisficing the needs of one or more foreign markets.

2. Resource-seeking (RS) FDI: that with the scope of gaining access to new natural resources for production (e.g. cheap labour, land, minerals, etc.).

(26)

26 3. Efficiency-seeking (ES) FDI: that with the scope of reaching a more efficient division of labour, or specialisation of an existing portfolio of domestic and foreign assets.

4. Strategic-asset-seeking (SAS) FDI: that with the scope of protecting or augmenting a specific O advantage of the firm, or reduce the one of competitors.

The first three FDI motives are concerned with the exploitation of existing assets or competences owned by the firm. Therefore the firm should have better, or at least equally valuable, FSAs than the other competitors in the market it enters. Having discussed before that EMNEs possess resources of inferior quality than their counterparts from more advanced countries, then it would not make much sense for them to carry out asset-exploitative FDI in such markets. Instead, it theoretically makes more sense to carry out this kind of FDI in less or similarly developed countries.

Working Proposition 4(a): African EMNEs will carry out MS, RS, and ES FDI in

other developing countries.

SAS FDI has the objective of not only transferring some FSAs, but also, and most importantly, “to learn, or gain access to, the necessary strategic assets available in the host country”, or company for that matter (Makino et al, 2002). If an EMNE wants to access more advanced resources to compete internationally, then it should look at more developed countries to invest in (Luo & Tung, 2007).

(27)

27

Working Proposition 4(b): African EMNEs will carry out SAS FDI in developed

countries.

3.3.4 Internalisation sub-paradigm

Internalisation theory originated in the work of Peter J. Buckley and Mark C. Casson (1976), where they noted the presence of imperfections in the market, and highlighted the benefits that could arise by internalising these imperfections if the benefits are bigger than the costs. Their theory relies on the work of many seminal authors (for example: Penrose, 1959; Vernon 1966, 1971; Dunning, 1971) but mainly on the transaction-cost theory of Coase (1937). This last author got to the conclusion that, given alternative coordination mechanisms, economic principles indicate that the cheapest form will always be chosen (Coase, 1937). This was basically an explanation for the existence of firms: they occur when managerial coordination represents a cheaper option to the market (Buckley and Casson, 2009). According to this view, a firm internalises some imperfections of the market in order to make them more efficient. When the internalisation of imperfections is done across borders, then it gives rise to an MNE (Buckley & Casson, 1976).

Buckley & Casson (1976) identified two particular types of internalisations caused by market imperfections: operational internalisation, involving intermediate products going through the various stages of production and distribution, and knowledge internalisation, which involves the flow of knowledge from R&D to production. These two types of internalisation of market imperfections are a powerful explanation for the ‘boundaries of the firm’ (Buckley & Casson 2009). The concept of the external market having imperfections is also the rationale that pushed Dunning to insert the third leg to the tripod that is the OLI model. As briefly mentioned earlier, the

(28)

28 internalisation sub-paradigm is useful to explain why firms decide to internalise some O-advantages instead of selling/purchasing them in the market (Dunning, 2000).

To explain the internalisation of knowledge assets by African EMNEs three concepts are useful: ‘information asymmetries’ (Buckley & Casson, 2009), ‘asset specificity’ (Williamson, 1985), and ‘tacitness of knowledge’ (Teece, 1977). When information is asymmetric in a deal, it means that one party has more, or better, information than the other, creating therefore an imbalance between the two parties. According to Buckley & Casson (2009) the most substantial gain from knowledge internalisation arises from the information asymmetries that would characterise such transaction if carried out on the market. In addition to this, there is to say that not all knowledge is suitable to be purchased/sold through licenses, patents and other types of contracts (Kogut & Zander, 1993). The “tacitness of knowledge inhibits its transfer unless instructor and receiver interact directly in a form or learning by doing, but this can make the transfer of knowledge very costly” (Meyer et al., 2009; p. 65). This concept is important to understand why firms opt for acquisitions when the desired assets are intangible and hard to transfer from the seller to the purchaser; very good examples of such assets are: the internal capabilities of a firm, and its network of customers and suppliers. The third relevant concept is “asset specificity” (Williamson, 1985). This, in simple terms, defines the assets of a firm as being the outcome of the evolution process of said firm, and of all the contextual variables that affected this evolution: relationship with suppliers/customers/competitors, proximity to suppliers/customers/competitors, degree of expertise of workforce, experience maturated in the past, etc. It follows that, the higher the specificity of an asset, the harder it is to transfer the asset and the benefits it accrues. African EMNEs that want to improve their capabilities by tapping into the ‘Western’ knowledge

(29)

(strategic-asset-29 seeking FDI) will most likely face all of the three of the problems just described. Therefore I would expect African EMNEs to opt for high levels of internalisation, i.e. through equity-based FDI.

The explanation for the operational internalisation when African EMNEs pursue MS, RS, and ES FDI in Africa, or other equally developed regions, relies on the fact that this kind of firm, because of its LCF status, is constantly trying to acquire new competences; to then serve the EMNE as a whole. This means that if they expand in other developing markets they will still want to retain, at least partially, control over the operations. I would expect their ultimate goal being that of not just internalising production, but also some embedded knowledge (i.e. knowledge spillovers). For this reason I would expect African EMNEs to opt for equity levels of expansions also in other developing countries.

To formalise my expectations on the internalisation behaviour of African EMNEs the following proposition is advanced.

Working Proposition 5: African EMNEs opt for equity-based international expansion

(30)

30

4. Methodology

In this section of my thesis I am going to elucidate the research design of the study for evaluating the “working propositions” developed during the “conceptual foundation” section. The aim of course is to answer the overarching research question posed at the beginning, which is at the core of this paper:

How well does the eclectic (OLI) paradigm help us understand the internationalisation of South African EMNEs?

First of all I am going to explain the research philosophy of the study, moving then to showing the methodological choices and the reasons behind them. Subsequently there will be a description of the research structure, considering the rationale behind cases’ selection, and a brief discussion on the general validity of this type of research. The chapter will conclude with an account of the selected cases, the collection of data and the utilization of such data to reach my conclusions.

4.1 Research Philosophy

When conducting research to create new knowledge one must be aware of the philosophy guiding his or her analysis and interpretation of the facts. In management research there are 4 main philosophies: positivism, realism, interpretivism and pragmatism (Sounders et al., 2007). Epistemology, as branch of philosophy, is concerned with the characteristics of what is deemed to be considered knowledge. Nevertheless it is difficult for a research to fall perfectly inside one of these four categories (Sounders et al., 2007). Regarding this thesis I would consider the philosophy behind the research carried out to be “realist”. This line of thought asserts that what our senses tell us about the world is the truth, which is similar to positivism in the sense that it entails a scientific approach to the development of knowledge

(31)

31 (Sounders et al., 2007). Realism is somewhere in between positivism and interpretivism. The former asserts that the researcher is completely independent of the data being analysed, it is just a mere observer of reality; the latter in its place says that it is important to understand the mechanisms of human interaction and the related differences as social actors (Sounders et al., 2007).

In the realist realm we can further differentiate between the “critical” and the “direct” one. I see myself, and this thesis, to be part of the former subcategory. This says that what we experience through our senses is an interpretation of reality, not the truth per se (Sounders et al., 2007). A perfect example of this being optical illusions, your mind does not register the image as it is, but what the illusion wants your brain to perceive. Instead, a direct realist would say that what we perceive through our senses is the reality as it is. In the end I can describe the epistemology of this thesis research as being “critical realist”, which means that what we experience is the truth, but it is open to misinterpretation.

Ontology in concerned with what the researcher deems to be reality and how he or she interprets it (Sounders et al., 2007). The two main views in ontology are objectivism and subjectivism. The first does not allow for the interpretation of reality to be affected by the opinion of the observer, while the latter does (Sounders et al., 2007). A critical realist would have an objective approach, but acknowledging that interpretation is biased by social conditioning.

4.2 Research Approach

The research approach is defined by what is the overall scope of your research and determines the path to reach your conclusions. The dichotomy is between deductive and inductive research. The former has the aim of testing a theory through data, while the latter to build theory based on the data collected. This thesis is more deductive than

(32)

32 inductive. I say this because I first derived my working propositions through the interpretation, and sometimes extension, of existing IB literature, and then I will evaluate if these ideas are useful for understanding the focal phenomenon. This means that I will analyse the behaviour of African EMNEs in order to see if they behave according to my expectations. Nevertheless, I would not define this thesis as being completely deductive since my working propositions do not rely solely on theory, but also from some preliminary research carried out on the general characteristics of the African context, and in particular of African EMNEs. There is clearly an attempt to allow the data to ‘speak’ and suggest new insights.

4.3 Research Strategy

Before moving to the research strategy it is important to mention what is the purpose of this study. Usually we find three categories: explanatory, exploratory, and descriptive. The latter is concerned with the accurate description of a phenomenon. Explanatory research instead analyses the causal relationships between the variables observed, while exploratory research has the aim of extending our knowledge on a specific topic (Sounders et al., 2007). This thesis is certainly exploratory: not only it tries to extend our understanding of African EMNEs, but also it analyses the applicability of the extant IB literature to a modern phenomenon.

In order to test whether my propositions regarding the internationalisation behaviour of African EMNEs find support in actual data, I opted for a case-study approach (Eisenhardt, 1989; Eisenhardt & Graebner 2007; Kolk et al. 2014; Yin, 2003; 2009). Robson (2002, p.178) defines case study as “a strategy for doing research which involves an empirical investigation of a particular contemporary phenomenon within its real life context using multiple sources of evidence”. Yin (2003) distinguishes between 4 case study strategies, based upon two discrete dimensions:

(33)

33 single vs. multiple case, and holistic vs. embedded case. For my research I will adopt a multiple-case study approach, with embedded unit of analysis, in line with Eisenhardt (1989) and Eisenhardt & Graebner (2007). My approach will not be solely inductive, as already discussed, but it will still retain many of the characteristics outlined in those two seminal papers. Using case studies as research method is well suited to create novel theories or work on existing ones (Eisenhardt, 1989). It must also be said that the validity of the theory emerging from this research method is not to question since “the likelihood of valid theory [resulting from multiple-case studies method] is high because the theory-building process is so intimately tied with evidence that it is very likely that the resultant theory will be consistent with empirical observation” (Eisenhardt, 1989).

4.3.1 Quality Criteria of Case Study Research

Case study research has received many critiques during the years because of its apparent lack of scientific rigour and generalizability (Yin, 2009). However respecting certain quality criteria, common to scientific research, can ensure the sound quality of this kind of research. These criteria are: construct validity, external validity, internal validity and reliability (Yin, 2009).

Construct validity refers to the accurate measurement of the objects being studied. This can be achieved by using various sources of data and by using proven units of measure (Yin, 2009). To ensure construct validity this thesis will collect its data from multiple sources, unrelated between each other, which will lead to data triangulation. As stated before data for the African context is not abundant, but I believe sufficient data will be collected to determine whether my working propositions are supported or not. In the case the information gathered is not enough to evaluate a specific working proposition, it will be clearly stated. That said, all the proxies used to

(34)

34 verify my working propositions rely on sound economic concepts or are drawn from extant IB literature, therefore reinforcing the construct validity.

Internal validity, is concerned with the causal relationship of the findings (Yin, 2009). In order to ensure the internal validity, following Yin (2009) advice, this research is based on sound existing IB literature, and uses a mixture of qualitative and quantitative data. Moreover, the adoption of multiple-case analysis, in contrast with the single case, will enable an appropriate degree of triangulation (Eisenhardt, 1989). Using more than one case, especially in this context where data is scarce, enables my findings not to be categorised as possible exceptions or abnormalities, therefore increasing the credibility of the research.

External validity, or ‘transferability’ in qualitative studies, is concerned with the generalizability of the findings of the research. The replication logic is essential for multiple case study analysis since it ensures the external validity of the patterns found (Yin, 1984; Eisenhardt, 1989). In addition to this, the use of a mixture of inductive and deductive reasoning ensures that the eventual patterns found will be supported by both theory and by data. For qualitative studies it is important to portrait clearly the setting of the research, in order to allow the readers to identify the other cases to which the results can be generalizable. This is the reason why this thesis clearly explained the context in which is set (Africa), the characteristics of the actors of interest (EMNEs; Table 1), and the theoretical concepts used.

A research must also be evaluated for its reliability. This means that the researcher has to clearly explain the steps taken and the sources used to develop its analysis of the phenomenon. This allows the readers to personally check the trustworthiness of the data used, of the way it is used, and therefore of the results

(35)

35 obtained. In this thesis all the steps taken, and the reasons behind them are clearly described, with this ‘methodology’ chapter being a perfect example.

4. 4 Case selection

4.4.1 South Africa as Specific Context

One important notion that has to be kept in mind is that: “the precise configuration of the OLI parameters facing any particular firm, and the response of the firm to that configuration, is strongly contextual” (Dunning, 2000, p. 164). This means that there is no specific configuration because firms are generally affected by various external and internal forces, at different points in time, and at varying degrees of influence. Therefore, although the OLI model as a general framework is not context-dependent, it is still important to analyse the context in which the firms operate. Although I tried to select firms that resembled truly Africa-based MNEs, as the continent is so big and culturally mixed, parts of the internationalisation paths that will emerge might be heavily dependent on the country of origin chosen: South Africa. However, thanks to the exact definition of what is intended as an EMNE (Table 1), and to the nature of the working propositions (and the research question for that matter), the findings should be quite generalizable to all MNEs coming from Africa; and to some extent also to all EMNEs. Let us now see the rationale behind the choice of South Africa and some of the contextual characteristics.

“The South African economy is the most advanced on the African continent, with a sophisticated financial system that includes one of the top 10 stock exchanges in the world” (Southern African Development Community). This quote alone should already give a good idea of why I chose South Africa. Since my interest is to study the internationalisation of firms, it makes sense to chose a country that has a quite developed economic system. This is mainly for two reasons: firstly the expansion

(36)

36 beyond national borders usually implies that the national market is already saturated and therefore there is need to look for other resources or customers; and secondly the economic development of the country implies a parallel development of the institutions regulating the market, which in turn should result in more, and more transparent, information regarding firms’ activity.

Another reason that prompted me to choose South Africa is the fact that it was one of the first African countries for which there was serious hope of development, and it has become to be a relatively important player in world trade. A clear proof of this is the fact that in 2010 South Africa was added to the BRIC (Brazil, Russia, India, and China), now BRICS, association. This last is composed by the majorly influential developing countries in the world (South Africa Info, April 2011). The state of development, and international presence, of South Africa, also hints that the chances of finding other researches in the IB field that study this country would be higher, even though still very scarce. Before starting a research is very useful to analyse the work carried out by other researchers and see the direction of their findings, or hypothesis, to then have a clearer picture of what to research, and how.

Finally, one other factor that pushed me to select South Africa is the relatively recent opening to international trade of its home market. From 1948, when the Nationalist government rose to power, until 1994 when apartheid officially ended, the country was heavily protected from international trade (Ramamurti & Singh, 2009). State owned enterprises became the main vehicle for the development of an economy that aimed at improving the quality of life of the Afrikaner community (Ramamurti & Singh, 2009). The element of protection from international trade, followed by a relatively recent opening to international trade is a factor common in many developing, or recently developed, countries (e.g. China, Russia, India, etc.). This is

(37)

37 good for the generalisation of findings, both in terms of previous studies of EMNEs analysed while writing the thesis, and in terms of what will be the final outcome of this research.

4.4.2 Cases’ criteria and selection

The decisions regarding which firms to analyse in order to represent the South African economy, and to an extent the African one, was not an easy one. The aim was to find stories of international success that relied on the capabilities of the firm (FSAs), and had a true (South) African identity. Firstly I excluded all the companies that moved their HQ outside South Africa and operated more as purely international firms, rather than South African ones, such as SAB Miller. Then I also excluded those companies that in the years have developed to be more like large holding companies with interests in various, or few but very lucrative, industries. This was because I was interested in possibly analysing the development of FSAs rather than investment abilities. At the same time I also looked for companies that had a really successful internationalisation strategy, because the aim of this research is to understand how EMNEs can become one of the leading firms in its industry, at least in one continent. However I excluded also all the companies whose main sector was related to banking and other types of financial services. Overall these selection criteria already did not leave many options left. In the end I opted for analysing four South African EMNEs. That is because I believe that already analysing four companies with a well-structured qualitative analysis will be enough to evaluate the validity of the working propositions. Especially if chosen appropriately.

In order to best represent the South African market I chose four EMNEs that differ substantially between them. This was done also to increase triangulation of data (Eisenhardt, 1989; Yin, 2009) and marginalise industry-specific effects on the strategic

(38)

TABLE 2 – EMNEs (cases) chosen and relative information

Company Name

Year of

incorporation Year of first FDI

Main sector of operations Rank in the “Top 500 companies in Africa 2013”* Brief Description

Sasol Limited 1950 1994/5 Chemicals and fuels 3

Initially incorporated as a parastatal company to reduce South Africa’s dependency from international market. Fundamental role in the development of South African industries. Nowadays is a pioneer in Gas-to-Liquid technology and a global player in the petrochemical industry.

Sappi Limited 1936 1988 Paper 11

Incorporated in South Africa for the production of paper, it started exporting globally quite soon due to the relatively small size of home market. Through a series of strategic acquisitions in developed markets it became a global leader, especially in coated paper industry.

MTN Group 1994 1997 Telecommunications 4

Telecommunication company started during liberalisation of domestic industry. Quickly expanded through Africa, and subsequently in Middle East. One of biggest telecom operators in Africa and Middle East. Won many awards for its brand.

Dimension Data

Plc. 1983 1993

Integrated IT

systems /

Company that first built its competences, and market share with them, in South Africa, then pursued strong international expansion at the end of the Apartheid era. It benefitted strongly from the market’s excitement about new technologies at the end of the 90s, and also suffered the losses when the bubbled exploded. Acquired in 2011 by the Japanese telecom giant NTT.

(39)

choices that will emerge. These firms are: Sasol Ltd, Sappi Ltd, MTN Group, and Dimension Data Plc. In table 3 it is possible to see how this firms operate in very different sectors. However there is also another differentiating dimension, industry sector aside, that is very important to take into consideration. On one hand Sasol and Sappi are similar to the firms that John Dunning analysed when developing the OLI model, in the sense that: they are firms in which it is involved the utilisation of raw materials for the production of physical goods to be sold on the market. They are representative of the characteristics of the second industrial revolution, even though it had already “finished” in the most developed countries (Ramamurti & Singh, 2009). On the other hand, MTN and Dimension Data (DiData) are representative of the firms that took advantage of the digital revolution. These two EMNEs base their FSAs on the new technologies of the modern world where everybody and everything is connected to each other. DiData now is actually owned by NTT, the Japanese telecommunication giant, but it was included because it is representative of those successful firms coming from emerging markets that get acquired by MNEs from more developed countries (the reasons for it can be many). All four these EMNEs, to different extensions were latecomers in the global market, but with different strategies were able of becoming international success stories. These four EMNEs have many things in common, but are also very different between each other, but this will be analysed and discussed better in the cross-case analysis (Yin, 2003; Kolk et al. 2014). Overall I believe that by choosing these four EMNEs I was able of capturing sufficiently the spectrum of characteristics of successful South African EMNEs that developed internationally valuable FSAs through their history.

Internationalisation of African EMNEs