Electronic Theses and Dissertations

Date

2022

Document Type

Dissertation

Degree Name

Doctor of Philosophy

Department

Business Administration

Committee Chair

Frances Fabian

Committee Member

Kenneth Kreitner

Committee Member

Lenny Schranze

Committee Member

Tmothy Shiu

Abstract

This study investigates the question of how multinational enterprise (MNE) investment location choice in the African context is affected by host countries that have a considerable number of national subgroup classifications, referred to as levels of fractionalization. Fractionalization quantifies the amount of sub-cultural group diversity within a nation based on ethnicity, language, religion, politics, or any other distinctive social groupings. While the international business literature has extensively focused on institutional and cultural distance between an MNE home and host country and its influence on strategic decisions, specifically location choice ( Berry, Guillen & Zhou, 2010; Kim & Aquilera, 2016), there is a growing number of economic and political science studies that assess the roles of ethnic diversity within countries on other important variables such as the quality of institutions, and economic growth at the country level (e.g., Annett, 2001; Collier, 2001; Dow, Cuypers & Ertug,2016; Easterly & Levine ,1997; Leeson, 2005; Lindner & Strulik, 2008; Montvalo & Reynal-Querol, 2005; Ortmeyer & Quinn, 2020; Papyrakis & Mo, 2014; Tan, 2010); few management studies have considered the influence of subgroups within a country and how that affects strategic decisions of multinational firms at the firm-level. Fractionalization can have both unfavorable and favorable economic implications for business. For example, sub-group conflict, bias and prejudices can lead to political instability, complexity, and greater costs from accommodating heterogeneity. At the same time, a variety of different social groups can also produce more profitable innovations and creativity (Alesina & La Ferrara, 2005). Goren (2012) states that ethnic diversity may lead to higher integration in world markets, conditional to the size of the country, because of cross-border ethnic networks that can then enhance international trade connections. This dissertation research seeks to answer the following question: “Does fractionalization offer significant additional explanatory evidence for investment location choice above and beyond that provided by institutional and cultural distance?” The findings indicate that fractionalization offers significant explanatory evidence for investment location choice and this relationship is moderated by whether the MNE investment is of a technological nature.

Comments

Data is provided by the student.

Library Comment

Dissertation or thesis originally submitted to ProQuest.

Notes

Open access

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