**4. The nature and direction of African business globalisation**

and opportunistic. EMTNC often acts to avert constraints in the domestic market. EMTNC internationalises also for reasons such as the efficient utilisation of resources, to generate economies of scale, market expansion, diversification, risk reduction, cross-subsidisation of markets, learning, flexibility in operations, market share protection and avoiding domestic competition [39, 40]. Recently, Arndt et al. [41] also added possible friction in factor markets (labour markets) and financial constraints as possible push factors towards internationalisation strategies. Ibeh et al. found that emerging market firms in Africa did 'quota hopping' relocated from certain locations to areas where favourable quotas incentivised the setting up of export firms [42]. These views place new emphasis on managerial capabilities such as leadership, strategy formulation and implementation and organisational change. These are the critical endogenous factors firms need to venture into multiple complex contexts [43].

Internationalisation has also benefitted from the insights of new growth theory, considering endogenous sources of growth. Entrepreneurial capabilities are emphasised as the critical factor in growth and expansion of the enterprise [44]. The focus is on entrepreneurial orientation (EO) and international entrepreneurship (IE) (see [45–50]). EO is mostly associated with corporate entrepreneurship, which is the set of firm activities. These include venturing into new businesses, exploring and implementing innovation and elements of self or strategic entrepreneurship. EO is less explicit than IE—EO refers to the qualities of risk-taking, innovative and proactive behaviour. Some theorists also see EO as a multidimensional construct where each of the elements of EO is an independent behavioural construct that defines the space in which EO operates ([47], p. 4) IE is the discovering, enactment, evaluation and exploitation of opportunities across national borders. Some of the research focusses on international new ventures (INVs) or the so-called born globals, while others explore the international activities of established firms. According to Freeman and Cavusgil ([51], p. 3), '"International entrepreneurial orientation" is the behaviour elements of a global orientation and captures top management's propensity for risk taking, innovativeness, and pro-activeness'. The attention thus shifts to the vision of management as an important driver of internationalisation, strengthening the EO and EI explanation. Singal and Jain [52] found that clear corporate vision and strategic focus in Indian firms contributed to the successful development of globalisation strategies and success-

But the question remains: Whereto? Into which markets are MNCs expected to expand their operations? The literature developed explanations around the importance of institutions in the host market in providing stability, minimising market failures, reducing uncertainty and alleviating information complexity in economic exchanges [53, 54]. The notion that institutions matter has become axiomatic, particularly those formal institutional structures that, through written laws, regulations, policies and enforcement measures, prescribe the actions and behaviour of people, systems and organisations. In terms of geography, which geographical location will be optimal? The semi-globalisation literature noted the importance of not only considering conditions in the host market [55, 56] but also institutional strengths in region into which expansion is contemplated. The semi-globalisation approach suggests that a firm's foreign investments follow patterns exhibiting regional aggregation and arbitrage logic to cope with the opposing pressures of globalisation (i.e. integration) and local markets (i.e. localisation) [57]. Semi-globalisation involves partial cross-border integration

ful international operations of Indian MNCs.

52 Globalization

The international expansion of business from Africa, and specifically from South Africa, occurred primarily by means of mergers and acquisitions ([1, 8, 58, 59], p. 324–330; [60], pp. 253–257; [82, 83]) as expansion occurred incrementally as part of corporate entrepreneurship venturing into Africa. As South African OFDI constituted the bulk of African mergers and acquisitions between 2007 and 2013, market and asset-seeking strategies were thus pursued. New investments were relatively small—below US\$ 1 million in most transactions—and were stimulated by the unbundling strategies of conglomerates and the simultaneous refocussing strategies, as well as the privatisation policies of African governments after the early 1990s ([9], pp. 16–18; [85]). The geographical direction of business internationalisation of African enterprises was at first not aligned to the Uppsala model of Johansson and Vahlne [98]. This model predicted the direction of internationalisation of firms from developing countries through exports into neighbouring ethnically similar countries and only later into non-ethnically related countries but only as a much later strategy into developed markets. The history of African EMNC, of which most were South African companies, expansion into foreign markets shows more than half of OFDI entering European and UK markets (56% in 2013), 17.5% into North and South American markets, 16.2% into Asian markets and only 8.2% into the neighbouring markets of African countries ([61], pp. S96–S99). During the last few years, a marked increase in regional economic integration and subsequent cross-border business transactions are occurring, but the official OFDI from South Africa into other African countries remain below 10%.

The internationalisation strategies of the EMTNC from Africa were different and in response to firm-specific advantages, which varied between sectors. The semi-globalisation literature argues that not only conditions in the home market impact on internationalisation decisions [55, 56] but also the nature of the markets into which expansion is planned. The nature of developed markets in terms of similarity of demand, structure and operations was an important consideration in the direction of South African corporate internationalisation strategies. As pointed out by Ghemawat and the semi-globalisation literature, global expansion must be understood not only as a country-level analysis but as determined by conditions in the entire region. The region, which consists of a number of geographically proximate countries, becomes a determining level of analysis when explaining EMTNC globalisation.

Among the early globalising companies, the eclectic process model of Dunning explains the market-seeking and asset-seeking activities, but not the timing or direction of globalisation. The political changes in South Africa unleashed opportunities to overcome the restrictions of the domestic market: the limited size of the market (slow GDP growth and low per capita GDP), the stratified nature of demand and the necessity of risk aversion strategies considering the history of the country, the alliance between die new ruling party and the Communist Party of South Africa, the official policy of 'Reconstruction and Development' (RDP) as well as the cost-spiralling potential of a rigid labour dispensation. Efficiency-seeking motives also ran high, since operations outside the restrictions of the domestic market offered opportunities to reduce costs (or be more cost-effective) inter alia through flexible employment policies and enhanced productivity strategies ([62], pp. 236–240; [9], pp. 24–26; [90]). An important explanation was the FSA and CSA nurtured in endogenous growth. These constituted the entrepreneurial and managerial capabilities of the EO and IE of the first movers. These capabilities were developed in the domestic market under conditions of international isolation and sanctions [13] and later were applied strategically towards globalisation.

and asset-seeking operations of the group, and the international entrepreneurship (IO) of the new leadership escalated the evaluation and exploitation of opportunities outside the original

Latecomer Challenge: African Multinationals from the Periphery

http://dx.doi.org/10.5772/intechopen.81500

55

In SABMiller, globalisation strategy was driven by the EO of its management, who despite being locked into the domestic market until the 1990s strategically embarked on asset-seeking internationalisation. The first breweries acquired were in neighbouring countries such as Zimbabwe and Tanzania and other East African breweries and finally in Central America after 2001, China and the USA. The success of SABMiller's globalisation was grounded in the FSA of SABMiller's managerial global orientation, the knowledge of the African market (both beer and soft drinks) and subsequent ability to integrate its knowledge of both developed markets (in South Africa) and developing markets (also in South Africa and the other African locations) into a successful management and marketing strategy. The SAB decision to list in London in 1996 was a resource-seeking move—to raise capital towards further international acquisitions. It is not a case of the company having benefitted from its experience in 'overcoming institutional voids' (such as the absence of specialised intermediaries, regulatory systems or developing unique contract enforcement mechanisms—[66]), which gave it its competitive advantage and facilitated global expansion. The FSA lays in the incremental nature of mergers and acquisitions of the asset-seeking internationalisation strategies of SABMiller, which ultimately secured global market access. The disadvantage of the domestic political dispensation prior to 1990 was transformed into a distinct CSA—business was protected from foreign competition and could accumulate capital resources and diversify operations into different sectors, thereby building managerial capabilities in managing diversified conglomerates. The expansion on the African continent developed through an alliance with the Castle Group, which had vested interests in West Central and North Africa (primarily francophone countries—[58], p. 326). Globalisation strategy was used to manage the growing domestic risk (inflexibility in factor markets, empowerment costs, HIV/AIDS and brain drain) and relocate to London. In 2004, SAB was 20th on the UNCTAD non-banking company ranking, with a TNI of 55%, but by 2013, SABMiIler was ranked 55th with a TNI of 70%. SABMiller has enhanced its TNI but was overtaken by other TNCs in the global ranking position. The company migrated out of the developing country ranking list and is no longer perceived as a South African company.

**5. Internationalisation strategies from the developing market**

The diversity of operations among the African companies on the UNCTAD top 100 non-banking companies from developing countries complicates the identification of general internationalisation strategies that could result in the globalisation of business operations. South African companies dominate the list, followed by two companies from other parts of Africa—Sonatrach, as the SOE from Algeria, and the Orascom Construction Group from Egypt. The international expansion of Sonatrach is purely driven by market-seeking strategies, since the oil and gas deposits of the country mandate distribution outside the borders of Algeria. The company was established in 1963 with Algerian independence and extracted oil, built pipeline infrastructure for transportation and gas, conducted explorations, distributed petroleum products and monopolised the

home country.

When considering the globalisation strategies of Anglo American Corporation (AAC) and SABMiller, both companies had developed diversified conglomerate structures since the mid-1960s, whereby the mining company ventured into a number of different business activities, as did SAB. By the late 1970s, AAC as a group consisted of more than 656 companies operating in mining of a wide variety of metals and minerals, finance, exploration, property development, administration of businesses, housing, industrial manufacturing, food production, engineering, etc. ([63], pp. 273–324). Even before the political changes of the 1990s, entrepreneurial management had already established AAC operations in Australia Canada, Indonesia, Malaysia and various African countries, which shows the degree of IE in place. After 1994, AAC unbundled its diversified holdings in non-mining sectors and moved the headquarters of De Beers (the diamond mining and distribution company controlled by AAC and the Oppenheimer family) to Switzerland and Luxemburg and in 1998, after the merger with Minorco, listed on the London Stock Exchange as AAC PLC. The restructuring of the group with a firm focus on international mining operations entrenched the company in the OECD and is currently no longer seen to be a South African TNC [13, 64, 65]. AAC is currently ranked among the top 100 nonfinancial TNCs globally by UNCTAD on the World Investment Report, which is an improvement of 13 positions on that ranking since 2008. The 'globalisation' of AACs' business operations has not improved the company's TNI index, since it fell from 83.7% in 2008 to 20% in 2013. In the case of AAC, the initial CSA of the abundance of natural resources was reversed by the new political dispensation. Mines were not nationalised as in other African countries after independence, but ownership of natural resources was returned to the state, which with a system of licences regulated access to mining opportunities based on so-called transformation charters. These charters were 'negotiated' with the mining companies to secure compulsory transfer of ownership and management control to blacks. Large domestic enterprises that sought the internationalisation of their operations were described as instituting 'political risk management' [64]. The move to London and other OECD locations despite being involved in mining operations in developing regions is not as predicted by the Uppsala model, but underlines the FSA advantages in managerial expertise, access to capital and advanced mining technology. The AAC group has appointed a non-South African chairman in 2002 and American CEOs in 2004 to display the true global non-South African nature of its business ([65], p. 558; [85]). This entrepreneurial orientation (EO) enhanced the market and asset-seeking operations of the group, and the international entrepreneurship (IO) of the new leadership escalated the evaluation and exploitation of opportunities outside the original home country.

of the domestic market: the limited size of the market (slow GDP growth and low per capita GDP), the stratified nature of demand and the necessity of risk aversion strategies considering the history of the country, the alliance between die new ruling party and the Communist Party of South Africa, the official policy of 'Reconstruction and Development' (RDP) as well as the cost-spiralling potential of a rigid labour dispensation. Efficiency-seeking motives also ran high, since operations outside the restrictions of the domestic market offered opportunities to reduce costs (or be more cost-effective) inter alia through flexible employment policies and enhanced productivity strategies ([62], pp. 236–240; [9], pp. 24–26; [90]). An important explanation was the FSA and CSA nurtured in endogenous growth. These constituted the entrepreneurial and managerial capabilities of the EO and IE of the first movers. These capabilities were developed in the domestic market under conditions of international isolation and

When considering the globalisation strategies of Anglo American Corporation (AAC) and SABMiller, both companies had developed diversified conglomerate structures since the mid-1960s, whereby the mining company ventured into a number of different business activities, as did SAB. By the late 1970s, AAC as a group consisted of more than 656 companies operating in mining of a wide variety of metals and minerals, finance, exploration, property development, administration of businesses, housing, industrial manufacturing, food production, engineering, etc. ([63], pp. 273–324). Even before the political changes of the 1990s, entrepreneurial management had already established AAC operations in Australia Canada, Indonesia, Malaysia and various African countries, which shows the degree of IE in place. After 1994, AAC unbundled its diversified holdings in non-mining sectors and moved the headquarters of De Beers (the diamond mining and distribution company controlled by AAC and the Oppenheimer family) to Switzerland and Luxemburg and in 1998, after the merger with Minorco, listed on the London Stock Exchange as AAC PLC. The restructuring of the group with a firm focus on international mining operations entrenched the company in the OECD and is currently no longer seen to be a South African TNC [13, 64, 65]. AAC is currently ranked among the top 100 nonfinancial TNCs globally by UNCTAD on the World Investment Report, which is an improvement of 13 positions on that ranking since 2008. The 'globalisation' of AACs' business operations has not improved the company's TNI index, since it fell from 83.7% in 2008 to 20% in 2013. In the case of AAC, the initial CSA of the abundance of natural resources was reversed by the new political dispensation. Mines were not nationalised as in other African countries after independence, but ownership of natural resources was returned to the state, which with a system of licences regulated access to mining opportunities based on so-called transformation charters. These charters were 'negotiated' with the mining companies to secure compulsory transfer of ownership and management control to blacks. Large domestic enterprises that sought the internationalisation of their operations were described as instituting 'political risk management' [64]. The move to London and other OECD locations despite being involved in mining operations in developing regions is not as predicted by the Uppsala model, but underlines the FSA advantages in managerial expertise, access to capital and advanced mining technology. The AAC group has appointed a non-South African chairman in 2002 and American CEOs in 2004 to display the true global non-South African nature of its business ([65], p. 558; [85]). This entrepreneurial orientation (EO) enhanced the market

sanctions [13] and later were applied strategically towards globalisation.

54 Globalization

In SABMiller, globalisation strategy was driven by the EO of its management, who despite being locked into the domestic market until the 1990s strategically embarked on asset-seeking internationalisation. The first breweries acquired were in neighbouring countries such as Zimbabwe and Tanzania and other East African breweries and finally in Central America after 2001, China and the USA. The success of SABMiller's globalisation was grounded in the FSA of SABMiller's managerial global orientation, the knowledge of the African market (both beer and soft drinks) and subsequent ability to integrate its knowledge of both developed markets (in South Africa) and developing markets (also in South Africa and the other African locations) into a successful management and marketing strategy. The SAB decision to list in London in 1996 was a resource-seeking move—to raise capital towards further international acquisitions. It is not a case of the company having benefitted from its experience in 'overcoming institutional voids' (such as the absence of specialised intermediaries, regulatory systems or developing unique contract enforcement mechanisms—[66]), which gave it its competitive advantage and facilitated global expansion. The FSA lays in the incremental nature of mergers and acquisitions of the asset-seeking internationalisation strategies of SABMiller, which ultimately secured global market access. The disadvantage of the domestic political dispensation prior to 1990 was transformed into a distinct CSA—business was protected from foreign competition and could accumulate capital resources and diversify operations into different sectors, thereby building managerial capabilities in managing diversified conglomerates. The expansion on the African continent developed through an alliance with the Castle Group, which had vested interests in West Central and North Africa (primarily francophone countries—[58], p. 326). Globalisation strategy was used to manage the growing domestic risk (inflexibility in factor markets, empowerment costs, HIV/AIDS and brain drain) and relocate to London. In 2004, SAB was 20th on the UNCTAD non-banking company ranking, with a TNI of 55%, but by 2013, SABMiIler was ranked 55th with a TNI of 70%. SABMiller has enhanced its TNI but was overtaken by other TNCs in the global ranking position. The company migrated out of the developing country ranking list and is no longer perceived as a South African company.
