Foreign Subsidiary Performance: Evidence from Ghana

Abstract

The objective of this study is to examine the influence of selected ownership, location, and internalization-specific factors on performance of foreign subsidiaries in Ghana. Our analysis was based on 75 manufacturing investments made by MNEs from different countries in 1994-2008. The results indicated that market size, host country experience, greenfield establishment mode, and joint venture ownership mode had positively impacted performance of foreign subsidiaries independent of the measure of performance. Furthermore, international experience and cultural distance had influenced performance when the total performance measure was used. Finally, the ownership mode significantly influenced performance only in greenfield investments, and not in acquisition mode.

International Establishment Mode Choice: Past, Present and Future

“…Several papers look at this issue but these studies tend to compare the performance of greenfields versus the performance of acquisitions without exploring the theoretical underpinnings of the establishment mode choice (Table 2). This leads to mixed results with some of these studies suggesting that greenfields perform better than acquisitions because of lower control and integration costs (Woodcock et al 1994;Nitsch et al 1996;Havrylchyk and Jurzyk 2011;Dadzie et al 2014). Other studies find the opposite to be true-acquisitions are more likely to succeed because they do not suffer from liability of newness that plague greenfield operations (Pennings et al 1994) or because foreign acquirers target local value-generating assets or the most efficient local firm (Haar and Marinescu 2014;Georgopoulos and Preusse 2009).…”

International joint ventures research on Africa: A systematic literature review, propositions, and contextualization

“…In the context of Africa, empirical evidence suggests the appointment of a CEO who hails from the host country of the IJV or a CEO who understands the local market has a positive influence on the performance of the IJV (Argente-Linares et al, 2013a, 2013bGómez-Miranda et al, 2015). While Choi and Beamish (2004) did not find any significant performance differences in local partner-dominant management, we saw a significant positive role played by local partners in the performance of IJVs in Africa (Bartels et al, 2002;Boateng & Glaister, 2003;Dadzie et al, 2014;Hearn, 2015;Luiz & Charalambous, 2009). As a result, we expect local managerial control to be positively linked to the success of IJVs in Africa.…”

“…Because the formation of IJVs is driven by various goals, the measurement of their performance should be based on the achievement of the a priori goals rather than general performance measures or measures not aligned with the initial goals. For example, irrespective of the institutional challenges in Africa, we found compelling evidence related to the achieved goals in market-seeking IJVs (Dadzie et al, 2014) and efficiency and cost leadership strategies (Acquaah, 2009).…”

“…This could be a result of the nature of the themes explored. Eight studies (36%) used IB theories, such as social capital theory (Ado et al, 2017), the OLI paradigm (Dadzie et al, 2014; Dadzie et al, 2018), institutional theory (Hearn, 2015; Luiz & Charalambous, 2009), resource dependency and structural contingency theory (Hearn, 2015), organizational culture and national culture theories (Gómez‐Miranda et al, 2015; Kivrak et al, 2014), and the resource‐based view and Porter’s competitive strategy (Acquaah, 2009).…”

Market entry into Africa: Acquisitions and international joint ventures. Studies of foreign firms' market entry strategies, challenges, and performance in Africa

“…International acquisitions and joint ventures are gaining importance in Africa (Boateng & Glaister, 2003;Dadzie & Owusu, 2015) (Dadzie, Larimo, & Nguyen, 2014) and recently a study addressing how host country capability, target specific experience, institutions, and host country market structure impact Finnish firms' choice for partial, staged and full acquisitions in Egypt, Morocco, Kenya, and South Africa (Oguji & Owusu, 2017). This study showed that various firm-related and institutional factors affect the acquisition decisions of Finnish firms and that there has been a change of the emphases between partial and full acquisitions over time.…”