Internationalization Strategies of African Firms: A Strategic Tripod Perspective on the Commitment Levels, Target Markets and Internationalization Paths of African Food Processors

Abstract

Relevance – Despite increasing economic growth, African countries are still lagging behind in economic development. Today, the food processing industry, which has gained in importance in both consumption patterns and global trade, is promising vast growth potentials for developing countries. The internationalization of African food processors can subsequently have a substantial impact on the development of African countries. However, little is known about how African firms internationalize.
Aims – Therefore, this thesis aims at exploring internationalization strategies of African firms in terms of three internationalization dimensions: commitment level, target market and internationalization paths. Moreover, explanatory factors of African firm internationalization are analysed based on the strategic tripod framework by Peng, Sun, Pinkham, and Chen (2009), i.e. industry-related, internal and institutional factors.
Research Methods – Based on a unique data set of 210 food processors from Kenya, Zambia and Tanzania, firms’ internationalization strategies and their explanatory factors are assessed by applying statistical analyses, including descriptive, cluster and regression analyses. Moreover, four exemplary case studies of African food processors complement the analysis. This allows an enhanced understanding of the topic.
Findings – The analysis shows that internationalization strategies of African firms are unique and adapted to the particularities of the African context. More precisely, African firms primarily internationalize with low commitment, to regional markets and through upstream paths. There are, however, differences between the internationalization paths: Whilst upstream activities are often targeting global markets with a high commitment, downstream activities are mainly aimed at regional markets with a low commitment. Hence, African firms strongly rely on high-quality technology and inputs from global markets due to their lack of availability on the domestic market. Whilst upstream internationalization is a prerequisite for successful operations, international downstream activities are rather rare.
Moreover, it is shown that the strategic tripod is a suitable framework for the discussion of African firm internationalization strategies, as it can significantly explain the internationalization dimensions. More precisely, the commitment level and internationalization paths can be explained by all three factors, whereas institutional factors do not impact the target market decision of African firms. This indicates that institutions on the target market rather than domestic institutions impact firms’ decisions where to internationalize. Despite being a relevant framework, the strategic tripod factors only have limited explanatory power with regard to explaining African firm internationalization strategies.
Implications – This indicates that future research is needed to identify additional explanatory factors inside and outside the strategic tripod framework. In addition, the thesis has important political implications: In order to promote regional trade, African governments should engage in joint investments in infrastructure and strengthen free trade agreements.