The role of proximity to the State and its institutions on South African organisations' internationalisation process

Abstract

In today's business world, expanding the reach of emerging market organisations beyond their domestic borders is a strategic move. These organisations can unlock new growth opportunities and boost their bottom lines by tapping into new markets and diversifying their customer base. Moreover, expanding into international markets can positively impact the economy of their home country by generating additional tax revenue, creating new jobs, and attracting foreign investment. This complex process involves multiple factors, including the relationship between the state and the company. The Chinese model is an example of how the state's support can influence internationalisation. This model reflects the closeness of the company to the state and how this proximity to the state can shape a company's strategy. In contrast, South Africa has implemented the Broad-Based Black Economic Empowerment (B-BBEE) program to promote diversity in the mainstream economy. Implementing B-BBEE has brought the state and companies closer but has not translated into significant international expansion for many black-owned South African companies. Despite the benefits of B-BBEE, such as increased access to funding and resources, the lack of internationalisation limits the potential for growth and economic impact. The research aims to understand the complex relationship between the South African government and organisations and how this relationship influences internationalisation. The study used a qualitative exploratory approach to obtain deeper insights into the subject matter. The eight C-suite executives from three industries in the country, namely mining, telecommunications, and financial services, were interviewed to gather their perspectives and insights. The aim was to obtain valuable information from experienced individuals who hold crucial decision-making roles in their respective companies and who are accountable for formulating and executing strategies for expanding their business internationally. The outcome of the research was a set of propositions that could potentially pave the way for further investigations and future studies. The study builds on the existing knowledge of internationalisation by delving into the proximity phenomenon through an agency theory, providing a more nuanced and in-depth understanding of the topic from the South African perspective.