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"Global since Gold" The Globalisation of Conglomerates: Explaining the Experience from South Africa, 1990 - 2009

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  • Grietjie Verhoef

Abstract

The internationalisation of enterprises is one of the essential ways to strengthen the competitiveness of firms from developing countries (UNCTAD, 2005c: 3). Strong growth in outward foreign direct investment (OFDI) from developing countries has become the distinguishing feature of the twenty-first century. This OFDI flows from state-owned enterprises, sovereign wealth funds (SWF) as well as private enterprises operating as multinational companies from a home base or as free-standing companies. Multinational corporations have commenced activities since the 1960s by moving operations to resource-rich, low-cost labour and capital markets (Wilkins, 1970; 1974; 1988; Jones, 1994; 2005). The first wave of OFDI during the 1960s and 1970s was motivated by efficiency and market-seeking factors. This wave was dominated by firms from Asia and Latin America. A second wave of OFDI followed in the 1980s, led by strategic assetseeking enterprises from Hong Kong, Taiwan, Singapore and South Korea (Dunning et al., 1996; UNCTAD, 2005b: 3s). Since the 1990s China, Brazil, India, Russia (the so-called BRIC countries) Malaysia, Turkey and South Africa are among the countries expected to add significantly to OFDI growth (UNCTAD, 2005c: 4). The flow of investment funds from developed countries was expected, but the reverse trend displayed the emerging capacities in countries and firms outside the core of the international economy, which challenged the dominance of developed countries and companies from developed countries. These developments have prompted several questions: how do developing country firms succeed in entering global markets? Do these firms improve their competitiveness through OFDI? This paper investigates this phenomenon from the experience of South Africa. The emergence of EMNC (Emerging Market Multinational Corporations) prompted extensive analysis and debates about the nature of and motives for EMNCs, but has also led to more in-depth analysis of specific country characteristics and firm-specific reasons for OFDI.

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Bibliographic Info

Paper provided by Economic Research Southern Africa in its series Working Papers with number 238.

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Length: 27 pages
Date of creation: 2011
Date of revision:
Handle: RePEc:rza:wpaper:238

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Keywords: overseas foreign direct investment internationalisation business history conglomerates competitiveness industrial protection management strategy;

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  1. Tarun Khanna & Krishna Palepu, 2000. "Emerging Market Business Groups, Foreign Intermediaries, and Corporate Governance," NBER Chapters, in: Concentrated Corporate Ownership, pages 265-294 National Bureau of Economic Research, Inc.
  2. Sabina Alkire and Angus Ritchie, 2007. "Winning Ideas: Lessons from Free-market Economics," OPHI Working Papers ophiwp007, Queen Elizabeth House, University of Oxford.
  3. Tarun Khanna & Krishna Palepu, 2000. "Is Group Affiliation Profitable in Emerging Markets? An Analysis of Diversified Indian Business Groups," Journal of Finance, American Finance Association, vol. 55(2), pages 867-891, 04.
  4. Dunning, John H., 2000. "The eclectic paradigm as an envelope for economic and business theories of MNE activity," International Business Review, Elsevier, vol. 9(2), pages 163-190, April.
  5. Feinstein,Charles H., 2005. "An Economic History of South Africa," Cambridge Books, Cambridge University Press, number 9780521850919, October.
  6. John Dunning & Sarianna Lundan, 2008. "Institutions and the OLI paradigm of the multinational enterprise," Asia Pacific Journal of Management, Springer, vol. 25(4), pages 573-593, December.
  7. John Singleton & Grietjie Verhoef, 2010. "Regulation, deregulation, and internationalisation in South African and New Zealand banking," Business History, Taylor & Francis Journals, vol. 52(4), pages 536-563.
  8. Feinstein,Charles H., 2005. "An Economic History of South Africa," Cambridge Books, Cambridge University Press, number 9780521616416, October.
  9. John Dunning, 1981. "Explaining the international direct investment position of countries: Towards a dynamic or developmental approach," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 117(1), pages 30-64, March.
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