Latecomer Challenge: African Multinationals from the Periphery Latecomer Challenge: African Multinationals from the Periphery

Multinational corporations have commenced foreign direct investment (FDI) activities since the 1960s by moving operations to resource-rich, low-cost labour and capital markets. Successive waves of outward foreign direct investment (OFDI) since the 1960s and 1970s were motivated by efficiency and market-seeking factors. 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. The emergence of Emerging Market Transnational Corporations (EMTNCs) makes up a growing pro - portion of outward FDI, and they acquire an increasing share in foreign affiliates from developed markets conducting business in their regions. This chapter reflects on the transformation of businesses and business practice in Africa, from isolated peripheral actors to global players. This chapter investigates the history of leading emerging market multinational corporations from Africa since the 1980s and points to the implications for future globalisation of EMTNCs.


Introduction
Global FDI has been characterised recently by the rising proportion of OFDI from developing countries. By the first decade of the twenty-first century, the United Nations Conference on Trade and Development (UNCTAD) acknowledged the importance of the internationalisation of enterprises as essential to strengthen the competitiveness of firms from developing countries ( [1], p. 3). The OFDI growth trend from developing economies continued, growing

Africa rising to global markets
Since the launch of the New Partnership for African Development (NEPAD) in the early 1990s [9,10] and the acceptance of the Lagos Plan for regional economic integration in Africa, the actual economic integration of regional economies was less than impressive. OFDI by African economies was delayed as governments struggled to transform their economies. The strongest drive towards globalisation came from South African businesses that sought to enter the world markets after many years of sanctions and isolation which ended in 1990 as the country prepared for its first democratic election in 1994. As illustrated in Table 1, OFDI from Africa commenced from low levels of US$659 million OFDI in 1990 compared to Asia OFDI which already stood at US$11,024.3 million in 1990. African OFDI showed stronger growth off the low base than the rest of the world: world OFDI grew by 8.36%, Africa by 14.2% and Asia by 16.6% between 1990 and 2013 ( [2], Web Annex Table 2).
The strongest growth in African OFDI occurred in East Africa, with 118% growth (coming off a very low base as is reflected in Table 1). Central Africa posted 112% growth and Southern Africa 25.1% annual compound growth between 1990 and 2013 (with South Africa leading the growth rate by 27.3%), while West Africa grew only by 7.8% and North Africa by 11.4%. The GFC affected OFDI trends from Africa adversely, but with the exception of North Africa, which grappled with the aftermath of the 'Arab Spring', all the regions in Africa surpassed pre-2007 levels of OFDI by 2013. These developments were supported by the sustained growth of Africa's economy at a rate of 7.1% between 2004 and 2008 and 5.3% between 2008 and 2014 ( [2], p. 63; [86]).
An analysis of the composition of African OFDI since 1990 shows a doubling of outward stock as a percentage of gross domestic product. OFDI stock in Africa rose from 4.8% of GDP in 1990 to 8.6% in 2013, but in North Africa, the ratio only rose beyond 2% during the late 2000s to reach 4.4% in 2013 [86]. Source: UNCTAD WIR [11], p. 214; [2], Web Annex Table 2. Table 1. OFDI, Africa by region and South Africa, 1990-2013 ($m).
Latecomer Challenge: African Multinationals from the Periphery http://dx.doi.org/10.5772/intechopen.81500 In North Africa, Nigeria was most active in OFDI stock acquisition, while in East Africa, Kenya was the leading nation, although Mauritius (13.1% in 2013) and the Seychelles (19.4% in 2013) transacted higher ratios than the rest of the regional economies. In Southern Africa, the OFDI by South African companies was the highest in African OFDI stock acquisition, illustrating the dominance of South African business in OFDI on the continent. The important aspect of the stock acquisitions is the cross-border merger and acquisitions which point towards the business acquisitions outside the home country (Tables 2 and 3).    Table 29. * TNI = Transnational Index, which is calculated as the average of the following three ratios: foreign assets to total assets, foreign sales to total sales and foreign employment to total employment.

How do we explain business internationalisation? Theory and experience
The interest in the expansion of EMTNCs commenced more than 25 years ago when it became apparent that firms from emerging markets were gradually penetrating global markets. Matthews noted that the accelerated internationalisation of latecomer firms from the periphery, as well as the innovative strategies through learning and resource acquisition [16], added a dynamic nature to the EMNCs' participation in global markets. The interest became more systematic as the trend in OFDI reversed the dominant position of the developed markets' MNCs to OFDI from developing markets. Internationalisation theory developed from the initial economic model [17] with the emphasis on economic cost considerations of doing business abroad, such as transaction costs and uncertainty in markets [18,19,84], to the eclectic paradigm of the successive Dunning models depicting components or phases of internationalisation [81,[27][28][29], to the process model of the Uppsala school [18,[20][21][22]98]. The 'economic man' was gradually replaced by the 'behavioural man' in the process model by explaining internationalisation based on organisational theory [18,69]. Dunning's OLI model of firm expansion through ownership (O) advantages (firm-specific resources) and location (L) (host country natural resource endowments) allows for the internalisation of those advantages (I) to improve firm efficiency and competitiveness, rather than exploiting those advantages in other markets through arms-length transactions. Dunning [23,81] identified a set of motives for OFDI. These include market-seeking investments targeted to access to third markets, efficiency-seeking investments to improve efficiency through specialisation, resource-seeking investments seeking natural resources unique to specific foreign locations and strategic assetseeking investments to add to the existing proprietary resources of the firm. Rugman and Sukpanich argued that firm-specific advantages (FSAs) [91,92], complemented by countryspecific advantages or CSAs [24], which resembled the ownership and location advantages in the OLI model, determined international expansion of firms. Rugman and Verbeke [25] added the advantage of proprietary knowledge as contributing to FSA. Dunning later added alliance capitalism and firm networks that augment ownership advantages by incorporating knowledge shared in networks and alliances [23,26,27]. The organisational structure of internationalising firms subsequently changed from the hierarchical mode of integration, based on the transaction cost theories, to new forms of ownership domains created through networks and alliances. Utilising these networks and alliances, firms internationalised their operations by seeking strategic assets to augment their existing proprietary resources. The Dunning followers later on also acknowledged the importance of institutions in strengthening CSAs at each variable of the OLI hypothesis [28,29,91,92].
The 'static' approach to EMTNC internationalisation moved on to an understanding that '… internationalisation becomes a strategy aimed at strengthening the firms themselves thanks to the accumulation of resources previously not available' ( [30] [31,35]) in which firms without O to exploit abroad, find resources, internalise them and finally develop linkages or partnerships or networks to leverage against the risks involved in such outward strategies. Matthews thus suggested an LLL framework-Linkage, Leverage and Learning framework. Firms become increasingly integrated in international economic activities through not only asset-exploiting but also by asset-exploring, thus linking OFDI with the EMTNC strategies. Emerging market enterprises establish networks with foreign firms and learn from them (capability enhancement)-which is 'experiential learning' [87,88]. Firms in the developing country thus acquire knowledge, experience in equipment manufacturing, joint ventures and participation in GVC [89]. Depending on the ability of the emerging market firm to internalise or 'absorb' ('identify, assimilate and exploit') the new skills, technology or resources, the EMTNC is able to venture into the global market [36][37][38].
Renewed emphasis is hereby placed on country-specific analyses and the Gerschenkron effect, that is, the ability of latecomers to access and take over advanced technologies and catch up faster through linkages, collaboration and the leveraging of resources [97,99].
The dominant process model of internationalisation does not explain the entire set of internationalisation strategies of emerging market firms, since the latter are often reactive, incremental 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][46][47][48][49][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 successful international operations of Indian MNCs.
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 whereby barriers to market integration are high but not inhibitive. These situations cannot be fully understood through purely country-level analyses but require an evaluation of operations across multiple locations (e.g. within a region) that are distinct from but not entirely independent of each other [55]. Therefore, the region composed of geographically proximate countries becomes an important level of analysis when examining MNEs' internationalisation and institutional influences [55,57]. This perspective has become increasingly relevant to the expansion of South African firms into Africa.

The nature and direction of African business globalisation
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.  [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.
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.

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 market for the production and distribution of all related production after the nationalisation of the industry in 1967. Sonatrach acquired critical mass in the domestic Algerian petro-chemical industry, because in 1971 all hydrocarbon resources were also nationalised.  The role of leading technology as driver of globalisation was also critical in the globalisation strategies of Sasol and Sappi. Sappi (the South African Paper and Pulp Industries) acquired an international footprint utilising its locally developed knowledge base. Industrial protection policies implemented since the early 1920s assisted Sappi (established in 1936) in acquiring market domination. In 1987, Sappi acquire Saicor, then the world's largest producer of chemical cellulose and developed excess production capacity. Sappi commenced paper exports to European markets towards the late 1980s and in 1986 established an international selling subsidiary, Sappi International. International sales rose to half of Sappi sales even before the international acquisition drive. Since 1991, Sappi embarked on M&As in the UK (five paper mills), Germany (Hanover Papier) and Hong Kong (specialised pulp services), a majority stake in the US company SD Warren, the world leader in coated paper, and in 1997 the largest coated paper company in Europe, KNP Leykam. By 2000, Sappi was the world leader in the manufacturing of coated wood-free paper. Sappi listed on the London, Paris and New York stock exchanges but maintained its primary listing in Johannesburg (Economist, 13/7/2006; www.sappi.com). In 2004, Sappi expanded into the Chinese market by acquiring a 34% stake in a joint venture with Jiangxi Chenming. The reason for the joint venture was technology and expertise transfer: Sappi assisted with the building of paper machines, a mechanical pulp mill and a deinked pulp plant [13]. Sappi was ranked 50th on the list of the top 100 nonfinancial companies in the developing world in 2008, with foreign assets of US$ 4001 million, and by 2013 was ranked 98th by foreign assets and 33rd in terms of its TNI ( [2], web Table 29). The market and asset-seeking strategies of Sappi were facilitated by the company's ownership of proprietary knowledge and its ability to establish networks and alliances (joint ventures) to map out its global footprint.
The South African synthetic fuel producer, Sasol, could use its ownership of advanced leading technology to drive its globalisation strategy. Sasol was established in 1951 as a SOE to develop the German Fischer-Tropsch process of manufacturing synthetic fuel from coal commercially. Pioneering technology was developed, and South Africa became the first country in the world to produce fuel from coal commercially since the last half of the 1950s. In 1979, Sasol was privatised and listed on the JSE, because by the early 1980s, expansion was mandated by the threatening international oil crises unleashed by the OPEC price hikes of the early 1970s. Sasol built two additional manufacturing plants, Sasol 2 and Sasol 3. Sasol soon developed an extensive downstream chemical by-product business and by the turn of the century was a diversified chemical conglomerate. Sasol diversified operations from the start, e.g. into mining, in order to supply in its coal demand; it ventured in chemical products, oil and the development of chemical technology. In 1996, Sasol announced its Slurry Phase Distillate (SPD) technology internationally and by 2001 its world leading gas-to-liquid (GTL) technology. By 2008, international accreditation was received for the innovative research by Sasol Technology, in developing fully synthetic jet fuel ( [74], p. 26; [93]). The global positioning of Sasol was inevitable. Businesses built around natural resources are usually global, because they serve international customers in advanced markets, they seek alternative sources of resources due to the saturation or cost of domestic materials and such 'companies move up the value chain, selling branded products or offering solutions to niche markets' ( [66], p. 67). The improved SPD technology offered the opportunity for the global development of gas-to-liquid (GTL) technology. Sasol pioneered the first GTL plant in Qatar, another in Nigeria, and works in JVs around the world to apply its GTL as well as its coal-to-liquid (CTL) technology. Sasol was a strategic industry for South Africa during the international sanction era and developed a competitive advantage in the chemical industry through innovative technology. Early in the new millennium, Sasol started global acquisitions and joint ventures, following the Dunning [48]  These massive expansions made Naspers the leading emerging market electronic communications company. The focus of Naspers shifted to electronic trade and communication and is the largest emerging market company with a market capitalisation exceeding US$40 billion. Naspers is still listed on the JSE, from where it generates more than 70% of its revenue. Naspers occupies the 63rd position on the top 100 nonfinancial developing country companies, with a TNI of 35% [2]. Naspers owned innovative leadership, who engineered strategic business repositioning and e-commerce acquisitions. Naspers operates on all the continents of the world in e-commerce. The strong growth flows from the emerging markets in Asia, Central and Eastern Europe, India, the Middle East and Latin America. The innovative brand marketing strategy proved highly successful, both as a marketing strategy as well as a management tool, since the South African management strengthened managerial control and the working relationship with the local partners in the different countries.
Within only 10 years, MTN expanded operations to 28 countries in Africa and the Middle East. Its TNI is 31%, and its ranking on the top 100 nonfinancial companies in the developing world is 31-the highest of all South African companies in the ranking list in 2013. MTN market expansion was driven by FSA based on ownership advantages in exceptional management strategic vision, knowledge of the African market, the innovative application of brand marketing and the use of leading technology. The control of the company is in the hands of black South African businessmen, who integrated a loose network of single country operators into a single emerging market cellular phone giant.
The health-care expansion of both the Mediclinic Group as well as Netcare was driven by the FSA of medical expertise, the advantage of proprietary knowledge, in seeking new markets. Serious shortages in medical services and the rise of the middle class in Africa alerted medical doctors to the opportunity to expand private health care outside South Africa. The entrepreneurial opportunity was observed, and both health-care groups, established in the early 1980s, established hospitals in Namibia, the Middle East and the UK. These health-care groups target the higher end of the market and have therefore also penetrated the UK and Middle East markets.

The trend emerging
In contrast to the internationalisation of the Asian Tigers described by Matthews, the internationalisation strategies from the African periphery were motivated primarily by market, asset and efficiency-seeking strategies and less by resource-seeking motives. The observation of the internationalisation of the leading corporations that have diversified operations significantly to gain revenue from operations outside the home country, as discussed in this paper, seem to display the following dominant trends , as will be discussed below.
Internationalisation of the first movers was motivated by market and asset-seeking considerations. The long period of international isolation resulted in 'pent-up' capacity at South African firms. The size of the domestic market is small-GDP growth has slumped from 5% to below 2% in the last few years and is not likely to improve any time soon as a result of domestic political constraints. Market-seeking strategies offered access to the new fast-growing markets in Africa, with competitive labour resources. The market-seeking strategies were coupled by the mining companies' asset and resource-seeking strategies. The diversification of mining operations from South Africa by BHP Billiton, AAC and Gold Fields was motivated by resource-seeking and efficiency-seeking considerations. Access to new mineral resources and new mining companies outside South Africa assisted in reducing the risks associated with empowerment policies, domestic labour market rigidities and associated cost pressures. New explorations uncovering mineral deposits outside South Africa offered potentially higher efficiency and links to emerging markets. The expansion of Sasol into Mozambican gas fields was both motivated by resourceseeking considerations as well as the proprietary technology advantage of its GTL technology.
The expansion of the retailer Shoprite and MTN into African markets was purely market-seeking but facilitated by strategic managerial capabilities and knowledge of the context and complexities of the African market. In this respect South African companies possess a competitive advantage over non-African multinationals aspiring to enter the fast-growing African markets. Knowledge of the African cultural diversity, the different languages and consumption patterns was key to the success in the consumer market but also in the mobile telephone market and money transfer market. Therefore Shoprite linked up with MTN, and later also Vodacom, in supplying access to mobile telephone services and money transfer facilities at the shop outlet.
The export-driven international operations of most African firms are market-seeking without exception. The exports by Sonatrach (Algeria) and Sonangol (Angola) are purely marketseeking. The large number of medium-sized African firms engaging in purely commodity exports described by Ibeh et al. [42] only represents the beginning of business globalisation. It is the beginning of revenue stream diversification through foreign sales, but not yet the expansion of operations outside the home market. This type of emerging internationalisation occurs in the exports of food, flowers, wood and textiles. An important observation in this category of emerging internationalisation is the tendency of foreign investment in local enterprise, which then results in export initiatives. This is particularly the case in the floriculture operations in East and Southern Africa, the coffee exports from Ethiopia and Mozambique and the textile exports from East Africa and Mauritius. In this category the so-called 'quota hopping' practice by foreign firms seeking to diversify the location of their operations to bypass US export quota restrictions resulted in Southeast Asian textile manufacturers establishing subsidiary operations in African countries in order to export from 'Africa' and not from their home markets ( [42], p. 418). These collaborative efforts may well in the future build local enterprise and result in extensive internationalisation.
The second trend is that market and asset-seeking initiatives were driven by the competitive advantage of FSAs, found in proprietary knowledge and managerial capabilities. The proprietary knowledge of the locally developed technologies, such as the world leading CTL and GTL technology developed by Sasol or the mining technology of the mining conglomerates AAC and Gold Fields or the mobile telephone technology MTN, is injected into the African and Middle East markets. The expansion of the health-care companies Netcare and Mediclinic is also representative of advanced health-care technology as a vehicle for internationalisation. These technologies provided a strategic tool to access new markets and simultaneously address the growing constraints in the domestic market.
Technological advantages were underpinned by strategic managerial capabilities. The managerial capabilities of South African corporations constitute a vital element of the successful globalisation of their operations. Strategic leadership and dynamic capabilities in change management placed them in an advantageous position with respect to expansion into global and neighbouring developing markets. The diversified conglomerates of pre-1990 South Africa were multidivisional firms, managed by professional managers and not only family members (as is still the case in most of the emerging African conglomerates in other African countries such as Uganda, Tanzania, Ethiopia and Kenya). These competitive advantages were enhanced through the international orientation of South African management. Local managers are well travelled, have extensive business network links outside the country, possess ability to manage operations under conditions of political instability and social turmoil-as persisted in South Africa during the 1980s and 1990s-and take and manage risk in such markets [42,78]. The internationalisation of Sappi, the paper conglomerate, was both motivated by market-seeking considerations as well as the Asian Tigers type of learning and leveraging motives where Sappi acquired advanced fine paper production technology through the acquisition of the European and US paper corporations. The success of the sustained internationalisation operation was dependent on the management of the integration of the newly acquired technology into the existing knowledge base of the conglomerate. The opening up of markets offered strategic options conditioned by contextual constraints.
In this category of internationalisation, the fast-growing e-commerce and e-business markets are penetrated by innovation managerial activity [90]. The cases of the expansion of Naspers and MTN were engineered by strategic management vision. Innovative management proactively sought to leverage existing knowledge in the media and mobile telephone business to penetrate the e-commerce market. Naspers restructured the company and used organisational capabilities at firm level to refocus the media company to emerge as the largest emerging market conglomerate by 2013. Naspers' restructuring enabled the MTN expansion, and the electronic technology of the mobile company was leveraged by the retail company Shoprite, to offer electronic money transfer and payment services. Market-seeking strategies are strengthened by the international orientation of management.