The relevance of relationship benefits when entering an emerging market : a study focussing on the East African Community

Abstract

Business relationships have been studied as a driver for firm competitiveness through relationship marketing, but not as a strategic advantage when entering an economy. Prior research has identified several dimensions of market entry drivers from host country, home-location, sector-related as well as firm-level perspectives. This research study takes a managerial perspective and argues that relationships and their benefits are pivotal during market entry strategy formulation. It asserts that firms should alter their market entry strategies, specifically for emerging economies, taking into consideration the net gains of a client. This study used a mixed method design involving exploratory research and explanatory research. Semi-structured face-to-face interviews were conducted to make sense of the use of relationship benefits when entering the African market. An online self-administrative questionnaire was also used to gather further insights of attributes that individuals use when entering the East African Community (EAC) market. The findings revealed that institutions do stipulate the rules of the game in an emerging market. Although the research results were not conclusive regarding a wholly owned subsidiary being favoured for entry into an emerging market with stronger institutions, it was conclusive in indicating that firms still favour joint ventures into the EAC. Relationship building is time consuming and many who are given the opportunity to interact with clients still do not grasp the merits of building these relationships. This could be the reason why in general individuals still rely on social benefits like friendships; interactions beyond business relationships; sharing of information and knowledge with the client as opposed to psychological benefits.