Nonmarket strategies, domestic institutional development, and internationalization: evidence from MENA and sub-Saharan African regions

Abstract

This study examines the impact of the adoption of nonmarket strategies in domestic markets that drive the internationalization of emerging multinationals (EMNCs) from the MENA and sub-Saharan African regions. In this study, we consider corporate political activity (CPA) and corporate social responsibility (CSR) of EMNCs and examine their role in the degree of internationalization. Using data from 219 non-financial multinational firms from 15 countries belonging to the MENA and sub-Saharan African regions for the period from 2012 to 2021, we find a positive effect of CSR (0.84%) and CPA (13.57%) on the degree of internationalization when both strategies are used individually. This effect is stronger when both strategies are used simultaneously (the complementary effect, i.e., 24.86%). Moreover, the individual and complementary effects are more pronounced in the presence of a lower domestic institutional development level. Our study highlights that the adoption of nonmarket strategies domestically helps firms to enhance their internationalization and overcome their liability of origin.

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