Traditionally, the African landscape of multinational enterprises (MNEs) has been allocated binary categorisations of ‘Advanced’ or ‘Emerging’. However, for the first time, new research co-led by the University of Edinburgh Business School has recategorised MNEs into ‘Advanced’ (from high-income previous colonial and non-colonial countries), ‘Emerging’ (from middle-income countries both inside and outside the region) and ‘Nascent’ (from low-income African countries).
The recategorisation of MNEs in this paper comes with an attempt to explore how each category impacts on, or contributes to, the development of Africa. Professor Kenneth Amaeshi, Chair in Business and Sustainable Development, and co-author of the paper, said: ‘The paper showcases how these distinct types of MNEs provide different development opportunities, how they engage differently with local, national, regional, and supra-national institutions, and why this matters for international business policy’. This recategorisation has implications that inform upon practice and policy: the findings of the paper argue that the three-tiered conceptualisation allows to highlight distinct realities that each type of MNE faces when operating in the sub-Saharan region, which leads to different international business policy insights.
MNEs with different home countries differ substantially not only in terms of capabilities and resources and the internationalisation strategy that they adopt, but also in how they respond to the institutional challenges of African host countries. Some MNEs contribute positively to Africa’s development, while some undermine development. It is therefore important for policy makers to be circumspect in their pursuit of Foreign Direct Investment (FDI), to focus on attracting the appropriate FDIs that support indigenous corporations that will ‘meet them where they are’. For example, if the challenge is high unemployment, then the focus should be on attracting and supporting firms that will create jobs.
Continuing on from Kenneth's previous research and work on Africapitalism, the Government of Imo State, Nigeria, under the leadership of Senator Hope Uzodimma, has developed the 'One Kindred One Business Initiative' to demonstrate how local communities can be a source of inclusive economic development in Africa. The community-owned businesses emerging from this initiative will need to be connected to global value-chains to survive and thrive. Current research, which is gradually gaining traction, is exploring how the different Multinational Corporations in Africa try to integrate local entrepreneurs in their value-chains.
Kenneth Amaeshi is our Chair in Business and Sustainable Development and Director of the Sustainable Business Initiative.