Market entry of firms from emerging markets becomes increasingly important in sub-Saharan Africa. This panel examines a) the characteristics of these new players, b) the interconnections of them with their local counterparts and c) the implications for local entrepreneurship and business growth.
Foreign firms from developing countries have become increasingly important investors in sub-Saharan Africa. Alongside the larger firms, an increasing number of small scale immigrant entrepreneurs enters sub-Saharan African markets. Many of these start small scale businesses in the informal sector, where entry barriers are low. These foreign (immigrant) firms typically have advantages over domestic firms, such as better access to information and capital as well as management skills. On the one hand, this may have positive effects on the development of domestic enterprises and the economy as a whole. For example, increasing competitive pressure may force domestic firms to improve productivity. In addition, modern technologies and products introduced by foreign (immigrant) firms may induce spillover effects and increase creativity of domestic entrepreneurs. On the other hand, consumer demand may shift away from domestic firms, resulting in predatory competition and job losses. What does the empirical evidence tell us about these ambiguous effects? Do financially stronger foreign (immigrant) firms push away local enterprises and further constrain their development, or can they become central agents of job creation and economic development? What can we learn from business characteristics of foreign minorities with regard to the factors constraining growth especially that of informal domestic enterprises? This panel invites papers that qualitatively and/or quantitatively investigate foreign/immigrant enterprises in sub-Saharan Africa with regard to: a. their characteristics and strategies; b. their differences to and their interconnections with local counterparts; c. the implications of their market entry for local entrepreneurship and business growth.