Sources of competitive advantages of local firms in relation to global firms in emerging economies : a South African investment banking sector perspective

Abstract

The competition between local and global investment banks in South Africa has increased with the global players increasing focus on emerging markets. If the assumption that global investment banks have better skills and technology is true, the increased focus should create a change in market share dynamics and skew it towards the global investment banks.This research split up global and local investment bank into separate groups and attempted to understand the sources of competitive advantages of each and the nature of their interaction in four main service categories, advisory, financing, markets and private equity.The results showed that there is limited inter-group competition. The main competition in the South African investment banking industry is intra-group. The only disruptive change in market share could be brought about by a subsidiary of a global investment bank because they share competitive and disadvantages of both groups. Most global investment banks in South Africa have branch operations and there are very few subsidiaries.