Political Risk, Volume of FDI, and Ownership Strategy: Contextual Analysis of African Markets

Abubakari Zakari; Joyce Francisca Addo; Marian Maclean; Kakraba Ben Komla; Wang Min; Abubakari Iddrisu

doi:doi:10.11648/j.ijber.20221102.11

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Political Risk, Volume of FDI, and Ownership Strategy: Contextual Analysis of African Markets

Abubakari Zakari, Joyce Francisca Addo, Marian Maclean, Kakraba Ben Komla, Wang Min, Abubakari Iddrisu

Published in International Journal of Business and Economics Research (Volume 11, Issue 2)

Received: 22 January 2022 Accepted: 21 February 2022 Published: 15 March 2022

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Abstract

This research examines the relationship between political risk and the volume of FDI activity and ownership strategy of foreign firms in Africa. Our study employs panel regression models to examine 2,360 FDIs into four low political risk and five high political risk African countries during the period 2010-2017. This data represents FDIs from the top 10 countries with the most investments in Africa (UNCTAD, 2018). We find that there is a progressive increase in the volume of FDI activity by multinationals in high political risk countries, even though low political risk countries remain the preferred FDI destinations. We also find that joint venture (JV) is the preferred ownership strategy by foreign multinationals in high political risk African countries. The preferred ownership strategy in this research helps firms mitigate potential hostile government policies such as expropriations. This research contributes both theoretically and empirically to enrich the political economy and international business literature.

Published in	International Journal of Business and Economics Research (Volume 11, Issue 2)
DOI	10.11648/j.ijber.20221102.11
Page(s)	54-64
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Political Risk, FDI, Ownership Strategy, Africa, Entry Strategy

References

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Abubakari Zakari, Joyce Francisca Addo, Marian Maclean, Kakraba Ben Komla, Wang Min, et al. (2022). Political Risk, Volume of FDI, and Ownership Strategy: Contextual Analysis of African Markets. International Journal of Business and Economics Research, 11(2), 54-64. https://doi.org/10.11648/j.ijber.20221102.11

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Abubakari Zakari; Joyce Francisca Addo; Marian Maclean; Kakraba Ben Komla; Wang Min, et al. Political Risk, Volume of FDI, and Ownership Strategy: Contextual Analysis of African Markets. Int. J. Bus. Econ. Res. 2022, 11(2), 54-64. doi: 10.11648/j.ijber.20221102.11

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AMA Style

Abubakari Zakari, Joyce Francisca Addo, Marian Maclean, Kakraba Ben Komla, Wang Min, et al. Political Risk, Volume of FDI, and Ownership Strategy: Contextual Analysis of African Markets. Int J Bus Econ Res. 2022;11(2):54-64. doi: 10.11648/j.ijber.20221102.11

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@article{10.11648/j.ijber.20221102.11,
  author = {Abubakari Zakari and Joyce Francisca Addo and Marian Maclean and Kakraba Ben Komla and Wang Min and Abubakari Iddrisu},
  title = {Political Risk, Volume of FDI, and Ownership Strategy: Contextual Analysis of African Markets},
  journal = {International Journal of Business and Economics Research},
  volume = {11},
  number = {2},
  pages = {54-64},
  doi = {10.11648/j.ijber.20221102.11},
  url = {https://doi.org/10.11648/j.ijber.20221102.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20221102.11},
  abstract = {This research examines the relationship between political risk and the volume of FDI activity and ownership strategy of foreign firms in Africa. Our study employs panel regression models to examine 2,360 FDIs into four low political risk and five high political risk African countries during the period 2010-2017. This data represents FDIs from the top 10 countries with the most investments in Africa (UNCTAD, 2018). We find that there is a progressive increase in the volume of FDI activity by multinationals in high political risk countries, even though low political risk countries remain the preferred FDI destinations. We also find that joint venture (JV) is the preferred ownership strategy by foreign multinationals in high political risk African countries. The preferred ownership strategy in this research helps firms mitigate potential hostile government policies such as expropriations. This research contributes both theoretically and empirically to enrich the political economy and international business literature.},
 year = {2022}
}

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TY  - JOUR
T1  - Political Risk, Volume of FDI, and Ownership Strategy: Contextual Analysis of African Markets
AU  - Abubakari Zakari
AU  - Joyce Francisca Addo
AU  - Marian Maclean
AU  - Kakraba Ben Komla
AU  - Wang Min
AU  - Abubakari Iddrisu
Y1  - 2022/03/15
PY  - 2022
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DO  - 10.11648/j.ijber.20221102.11
T2  - International Journal of Business and Economics Research
JF  - International Journal of Business and Economics Research
JO  - International Journal of Business and Economics Research
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PB  - Science Publishing Group
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UR  - https://doi.org/10.11648/j.ijber.20221102.11
AB  - This research examines the relationship between political risk and the volume of FDI activity and ownership strategy of foreign firms in Africa. Our study employs panel regression models to examine 2,360 FDIs into four low political risk and five high political risk African countries during the period 2010-2017. This data represents FDIs from the top 10 countries with the most investments in Africa (UNCTAD, 2018). We find that there is a progressive increase in the volume of FDI activity by multinationals in high political risk countries, even though low political risk countries remain the preferred FDI destinations. We also find that joint venture (JV) is the preferred ownership strategy by foreign multinationals in high political risk African countries. The preferred ownership strategy in this research helps firms mitigate potential hostile government policies such as expropriations. This research contributes both theoretically and empirically to enrich the political economy and international business literature.
VL  - 11
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Author Information

Abubakari Zakari

Department of Management Studies, Kumasi Technical University, Kumasi, Ghana
Joyce Francisca Addo

Faculty of Creative Arts and Technology, Kumasi Technical University, Kumasi, Ghana
Marian Maclean

Department of Management Studies, Kumasi Technical University, Kumasi, Ghana
Kakraba Ben Komla

Directorate of Finance, Kumasi Technical University, Kumasi, Ghana
Wang Min

Department of Management and Economics, University of Electronic Science and Technology of China, Chengdu, China
Abubakari Iddrisu

Department of Mathematics, Dormaa Senior High School, Dormaa Ahenkro, Ghana

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Abubakari Zakari, Joyce Francisca Addo, Marian Maclean, Kakraba Ben Komla, Wang Min, et al. (2022). Political Risk, Volume of FDI, and Ownership Strategy: Contextual Analysis of African Markets. International Journal of Business and Economics Research, 11(2), 54-64. https://doi.org/10.11648/j.ijber.20221102.11

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Abubakari Zakari; Joyce Francisca Addo; Marian Maclean; Kakraba Ben Komla; Wang Min, et al. Political Risk, Volume of FDI, and Ownership Strategy: Contextual Analysis of African Markets. Int. J. Bus. Econ. Res. 2022, 11(2), 54-64. doi: 10.11648/j.ijber.20221102.11

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AMA Style

Abubakari Zakari, Joyce Francisca Addo, Marian Maclean, Kakraba Ben Komla, Wang Min, et al. Political Risk, Volume of FDI, and Ownership Strategy: Contextual Analysis of African Markets. Int J Bus Econ Res. 2022;11(2):54-64. doi: 10.11648/j.ijber.20221102.11

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@article{10.11648/j.ijber.20221102.11,
  author = {Abubakari Zakari and Joyce Francisca Addo and Marian Maclean and Kakraba Ben Komla and Wang Min and Abubakari Iddrisu},
  title = {Political Risk, Volume of FDI, and Ownership Strategy: Contextual Analysis of African Markets},
  journal = {International Journal of Business and Economics Research},
  volume = {11},
  number = {2},
  pages = {54-64},
  doi = {10.11648/j.ijber.20221102.11},
  url = {https://doi.org/10.11648/j.ijber.20221102.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20221102.11},
  abstract = {This research examines the relationship between political risk and the volume of FDI activity and ownership strategy of foreign firms in Africa. Our study employs panel regression models to examine 2,360 FDIs into four low political risk and five high political risk African countries during the period 2010-2017. This data represents FDIs from the top 10 countries with the most investments in Africa (UNCTAD, 2018). We find that there is a progressive increase in the volume of FDI activity by multinationals in high political risk countries, even though low political risk countries remain the preferred FDI destinations. We also find that joint venture (JV) is the preferred ownership strategy by foreign multinationals in high political risk African countries. The preferred ownership strategy in this research helps firms mitigate potential hostile government policies such as expropriations. This research contributes both theoretically and empirically to enrich the political economy and international business literature.},
 year = {2022}
}

Copy | Download

TY  - JOUR
T1  - Political Risk, Volume of FDI, and Ownership Strategy: Contextual Analysis of African Markets
AU  - Abubakari Zakari
AU  - Joyce Francisca Addo
AU  - Marian Maclean
AU  - Kakraba Ben Komla
AU  - Wang Min
AU  - Abubakari Iddrisu
Y1  - 2022/03/15
PY  - 2022
N1  - https://doi.org/10.11648/j.ijber.20221102.11
DO  - 10.11648/j.ijber.20221102.11
T2  - International Journal of Business and Economics Research
JF  - International Journal of Business and Economics Research
JO  - International Journal of Business and Economics Research
SP  - 54
EP  - 64
PB  - Science Publishing Group
SN  - 2328-756X
UR  - https://doi.org/10.11648/j.ijber.20221102.11
AB  - This research examines the relationship between political risk and the volume of FDI activity and ownership strategy of foreign firms in Africa. Our study employs panel regression models to examine 2,360 FDIs into four low political risk and five high political risk African countries during the period 2010-2017. This data represents FDIs from the top 10 countries with the most investments in Africa (UNCTAD, 2018). We find that there is a progressive increase in the volume of FDI activity by multinationals in high political risk countries, even though low political risk countries remain the preferred FDI destinations. We also find that joint venture (JV) is the preferred ownership strategy by foreign multinationals in high political risk African countries. The preferred ownership strategy in this research helps firms mitigate potential hostile government policies such as expropriations. This research contributes both theoretically and empirically to enrich the political economy and international business literature.
VL  - 11
IS  - 2
ER  -

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