What role does CEO vision play in the internationalization process of firms? Evidence from the banking sector in Africa

• DOI: http://doi.org/10.1002/tie.21958
• Author: Simona Gentile‐Lüdecke,Tilo Halaszovich,Sarianna Lundan
• Date: 01 January 2019
• Published date: 01 January 2019

THE INTERNATIONALIZATION OF AFRICAN FIRMS

What role does CEO vision play in the internationalization

process of firms? Evidence from the banking sector in Africa

Simona Gentile-Lüdecke

1

| Tilo Halaszovich

2

| Sarianna Lundan

1

1

University of Bremen, Bremen, Germany

2

Jacobs University Bremen, Bremen, Germany

Correspondence

Simona Gentile-Lüdecke, Faculty of Business

Studies and Economics, Hochschulring

4, 28359 Bremen, Germany

Email: simona.gentile@uni-bremen.de

This study examines the cross-border expansion of four major African banks from 1988 to

2014 in order to investigate the role of CEO vision in influencing their international investment

decisions. The qualitative case study approach is complemented by a quantitative analysis that

examines the multiple factors influencing internationalization patterns. The results from both

types of analysis indicate that the vision of the CEO matters, and that it is a key factor in

explaining the accelerated internationalization of three of the four banks examined in this

study. These results stress the need for considering managerial decision making in international

resource commitment decisions, particularly in an emerging market context, where a shared

developmental vision might be shaping the behavior of the entrepreneurs.

1|INTRODUCTION

Since the 1990s, sub-Saharan Africa has been among the world's

fastest growing regions, and the acceleration in economic growth has

been accompanied by an expansion of access to financial services

across the continent (Barbarinde, 2009; European Investment Bank

[EIB], 2013; Mecagni, Marchettini, & Maino, 2015). Recent periods of

financial liberalization and institutional as well as regulatory upgrading

have changed the face of the financial systems across the region

(Adams, Debrah, Williams, & Mmieh, 2015; Beck & Cull, 2013), which

have traditionally been subject to restrictive regulations and domi-

nated by European and U.S. banks (Adams, Debrah, Williams, &

Mmieh, 2014).

Over the past decade, African-based banks have been expanding

across the continent, reflecting a general increase in intra-African for-

eign direct investment (FDI) (Amankwah-Amoah, 2014; Krüger &

Strauss, 2015), and pan-African banking groups with significant cross-

border networks have emerged (Beck, Fuchs, Singer, & Witte, 2015;

International Monetary Fund [IMF], 2015; United Nations Confer-

ence on Trade and Development [UNCTAD], 2015). The cross-border

expansion of African banks has increased 10-fold since the 1990s,

but the exponential growth of their regional operations started in the

mid-2000s (Boojihawon & Acholonu, 2013; IMF, 2015). This develop-

ment not only provides an appropriate setting for our investigation

examining the role of CEO vision, but it also allows us to respond to

the recent calls to bring Africa into the research agenda (Nwankwo,

2012) as “Africa offers great potential as a context for management

research, and more empirical and conceptual work is warranted to

explain the richness of the opportunities on the African continent

and address the challenges within them”(Georg, Corbishley, Khayesi,

Haas, & Tihanyi, 2016, p. 389).

Internationalization decisions are an essential part of the strate-

gic challenges faced by firms, since they often involve significant

resource commitments (Schotter & Beamish, 2013). This is the case

not only for manufacturing firms but also for financial service compa-

nies (Grant & Venzin, 2009), since service production and consump-

tion often happen simultaneously, and internationalization is

conducted through FDI, ensuring a high level of control in host mar-

kets, but also entailing a higher level of risk. In financial services,

moreover, internationalization is subject to stricter regulation than in

many parts of the manufacturing sector, since banks are subject to

both high levels of entry control and postentry performance controls

(Engwall & Hadjikhani, 2014).

The international business literature has tended to view interna-

tional commitment decisions purely in economically rational terms,

“leaving limited or no room for decision-making on the part of the

managers”(Aharoni, Tihanyi, & Connelly, 2011, p. 135). In the Upp-

sala international process model (Johanson & Vahlne, 1977), manage-

rial decision making is present, but it is the accumulation of

experience that primarily influences the pattern of internationaliza-

tion. Overall, the focus of much of the internationalization literature

has been on the “incremental explanations that emphasize path

dependency and on explanations emphasizing external factors, that

DOI: 10.1002/tie.21958

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