Few indigenous Nigerian, or even African firms diversify their operations into international markets. Is this a coincidence? Or are there more generic reasons to explain this "fear", in spite of the fact that research suggests that there is a positive relationship between internationalization and firm performance.
Reasons for not internationalizing can be different: for instance, a large enough home market, lack of knowledge about foreign market opportunities, lack of suitable foreign partners, lack of internationally competitive products/services and, sometimes, just lack of ambition to expand internationally... It is not easy to encourage companies to expand abroad if the owners are not interested.
Tiia is right in pointing to the the above reasons. I think that a considerable amount of large African firms do not internationalise because they are doing good safe business at home, with almost no competition. Internationalising may be perceived as a source of great risk that they are not willing to take.
As a result of the actions of a few we lack TRUST. By the way what product or service can we sell ? Boko Haram , witchcraft or curruption ?
Hi, Adeniyi
That's a great question which probably warrants a full-scale study. There is a paucity of research on the internationalization of African firms and some of the explanations found in literature are anecdotal and not based on empirical research. As it stands there is no cogent body of knowledge on the internationalization of African firms. It is my hope that the formation of the Academy of International Business-Sub Saharan Africa chapter may create a unified voice to lobby some journals to consider a Special Issue on this subject matter. Comparative studies using a sample of African firms and firms drawn from other parts of the world will also help answer your question definitively.
A useful resource that attempts to capture the dynamics of internationalization from the African context can be found in Thunderbird International Review.
Ibeh, K., Wilson, J. and Chizema, A. (2012), The internationalization of African firms 1995–2011: Review and implications. Thunderbird Int'l Bus Rev, 54: 411–427. doi: 10.1002/tie.21473
Hello, I doubt this is a coincidence. Rather, I want to agree with Tiia's reasons. Participation in a local and known market, may not always prepare firms for challenges in other markets. This will be a good study, to find out success rate for the firms that venture internationalization.