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Ways to win: strategic choices, institutions and performance in sub-Saharan Africa

Ways to win: strategic choices, institutions and performance in sub-Saharan Africa The purpose of this study is to analyse the effects of market-based and nonmarket-based strategies on firm performance in African countries. This study also investigates host country institutions' effect on the relationship between firm strategies and performance in these countries.Design/methodology/approachData of 1,276 firms in five African countries were obtained from two different sources: The World Bank Enterprise Database and The Global Competitiveness Report. Two-stage least squares regression was applied.FindingsBoth market-based strategies and corporate political activity (CPA)improve firm performance in the African countries included in the analysis. Institutional development also has a direct positive impact on firm performance. However, the effect of CPA weakens as the host country shifts towards more efficient, market-oriented institutions. Furthermore, the results show that local African firms benefit more from institutional development than foreign firms.Originality/valueThe paper confirms and extends our understanding of the dynamic fit between institutions and strategy by highlighting the moderating role of institutional development on CPA and market-based strategies in enhancing firm performance. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Multinational Business Review Emerald Publishing

Ways to win: strategic choices, institutions and performance in sub-Saharan Africa

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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1525-383X
DOI
10.1108/mbr-05-2020-0105
Publisher site
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Abstract

The purpose of this study is to analyse the effects of market-based and nonmarket-based strategies on firm performance in African countries. This study also investigates host country institutions' effect on the relationship between firm strategies and performance in these countries.Design/methodology/approachData of 1,276 firms in five African countries were obtained from two different sources: The World Bank Enterprise Database and The Global Competitiveness Report. Two-stage least squares regression was applied.FindingsBoth market-based strategies and corporate political activity (CPA)improve firm performance in the African countries included in the analysis. Institutional development also has a direct positive impact on firm performance. However, the effect of CPA weakens as the host country shifts towards more efficient, market-oriented institutions. Furthermore, the results show that local African firms benefit more from institutional development than foreign firms.Originality/valueThe paper confirms and extends our understanding of the dynamic fit between institutions and strategy by highlighting the moderating role of institutional development on CPA and market-based strategies in enhancing firm performance.

Journal

Multinational Business Review – Emerald Publishing

Published: Jul 13, 2021

Keywords: Africa; Institution-based view; Emerging markets; Corporate political activity; Institutional void; Market-based strategies

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