Factors Affecting the Choice of Market Entry Modes in the African Telephony Industry

Maxwell Chanakira
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Maxwell Chanakira: Harare Institute of Technology, Zimbabwe

International Journal of Applied Behavioral Economics (IJABE), 2012, vol. 1, issue 2, 1-15

Abstract: This paper investigates the factors that influence the choice of market entry modes in the African mobile telephony industry - currently, a popular international investment destination. Using the survey methodology, the study focuses on six key enterprises, which account for over 60% of the cell phones in Africa. The empirical evidence suggests that market size in terms of population of the destination country and not psychic distance is the most important market selection criteria for enterprises entering Africa. The dominant entry market strategy for these enterprises is strategic alliances with a view to reduction of financial and commercial risk. Focused strategy is uncommon on the continent. More interestingly, and contrary to extant literature, political risk was not considered a market entry barrier. In any case, politically unstable countries tend to bring in higher returns. These findings are important in informing investors engaged in or with intentions to enter Africa and in enriching international literature. The Stages model and the Eclectic framework individually, are unable to explain the choice of market entry mode in Africa. The key contributions of this study are both theoretical and practical insights on the process of internationalisation.

Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:igg:jabe00:v:1:y:2012:i:2:p:1-15

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