Effects of institutional constraints to foreign market entry strategies of Finnish ICT-companies in Sub-Saharan Africa

Abstract

HELSINKI SCHOOL OF ECONOMICS (HSE) ABSTRACT International Business, Master’s Thesis 24.4.2009 Elias KahlaAbstract: EFFECTS OF INSTITUTIONAL CONSTRAINTS TO FOREIGN MARKET ENTRY STRATEGIES OF FINNISH ICT-COMPANIES IN SUB-SAHARAN AFRICA Abstract: Objectives of the research The aim of this study was to examine the effects of institutional constraints to Finnish ICT companies in sub-Saharan Africa. To be more specific, the aim was to investigate using institutional theory, what kind of difficulties and challenges Finnish companies come across when penetrating sub-Saharan African markets. Attention was paid on contextual factors which affect entry decisions of Finnish companies. The another aim was to investigate how companies see and react to pressures arising from local institutional environment and how these companies are able to achieve legitimacy in turbulent markets of SSA. Methodology In this study qualitative research approach was applied. The method of this study was multi-case study, and the case companies were Omnitele, Jutel, Tramigo and SANAKO. Each of these case companies represented one example country of the study. The empiric part included six in-depth interviews which were recorded and analyzed in the light of the research problem. These in-depth interviews followed a constructionist interview research approach. All these six interviews were conducted between November 2008 and January 2009. Findings and conclusions The findings of this study indicate that foreign entrants tend to use in-direct modes of entry in sub-Saharan Africa and that importance of local partner or outside consultancy is extremely relevant. Findings also suggest that different institutional constraints affect foreign companies differently and that case companies were either defying or compromising with the institutional pressures of local market environments. As for establishing legitimacy of the company in sub-Saharan African markets, competent products and good personal relations can be seen as factors mostly affecting legitimacy in the region. Keywords Sub-Saharan Africa, SSA; institutional framework; institutional constraints; local partner; personal relations