Impact of institutional voids on Japaneses multi-natonal enterprises operating in sub-saharan africa

Abstract

Japan, has been facing sluggish economic fortunes in the past two decades, however, generated by Japanese Multi-National Enterprises’ (JMNEs) foreign direct investment (FDI) activity has been the key source of driving Japan’s economy. However, given the size of the Japanese economy, FDI by JMNEs in Sub-Saharan Africa (SSA) is less than Western countries and China but no study is done. This research stands on the following three premises based on existing knowledge gaps and is designed to fill these gaps. (1) The internal culture of JMNEs influences their decision-making in expanding their business in SSA (internal factor). (2) IVs in SSA hamper JMNEs decision-making process (external factor). (3) Current host countries or Japanese government initiatives do not adequately fill the IVs (external intervention as solution). From 20 interview with senior manager of JMNEs based in SSA, it is identified that (1) Japanese corporate culture and its structure hampering their business expansion in SSA. (2) IVs, especially Political and Social System impacts on JMNEs’ operations in SAA but they overcome through their self-effort such as improvement of local operation or partnership including M&A. (3) For certain industries, such as exploitation or construction, financial support by government is key for their business. Keywords Institutional voids