An exploratory study into the historical tie factors as an influence for foreign direct investment flow: South African and Mozambique

Abstract

The historical ties have had limited explorations in the international business literature review. The existing studies have focused on overseas with countries having historic colonization relations, thus making the concept underrepresented in an African context. African country relations present different dynamics when it relates to historical ties. We adopt an exploratory approach for this research to investigate the historical tie factors as an influence for foreign direct investment (FDI) by looking into South Africa and Mozambique. The research contributes to academic literature expansion and for business to understand opportunities of cross-border trades/FDI flows as a result of either formal or informal historical ties. The study relies on the institutional based theory to understand the role played through historical ties and the implications on FDI flows. A total of 09 qualitative in-depth interviews were conducted with policy makers within the public sectors and companies participating in FDI to Mozambique from the private sector. The study results reveal that historical ties have an influence on foreign direct investment (FDI) flows. However, a number of formal and informal factors need to be considered in order to create an environment that positively enhances FDI flows especially between South Africa and Mozambique.