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What drives individual decision-making of Foreign Direct Investments (FDI) to Sub-Saharan Africa

Yusuf, Mukhtar Abubakar
http://orcid.org/0000-0002-5521-2495
http://rave.ohiolink.edu/etdc/view?acc_num=case1595283544911804

Abstract Details

2020, Doctor of Philosophy, Case Western Reserve University, Management.
This dissertation examines a multiplicity of factors that influence at the microeconomic level the level of Foreign Direct Investment (FDI). The main objective of the dissertation is to empirically explore and validate the effect of a select set of individual-level perceptual factors on FDI decisions. Given the paucity of research on the topic in comparison to macroeconomic studies of investment inflows between regions and countries, we conduct the study as a mixed-method study. The study consists of three interconnected empirical studies. The first seeks to identify the presence of factors that shape an individual’s decisions on FDI inflows. The two following ones seek to validate the effects of these factors on the individual decision maker's propensity to invest in a specific country. The first study belongs to a qualitative strand and answers the following research question: What are the investor’s critical perceptual factors and experiences that influence their FDI decisions? The study participants consisted of 30 foreign investors, the government’s Ministries, Departments, and Agencies (MDAs), and the Nigerian investors in the diaspora. The paper finds that on the supply side, several key FDI perception factors influence decision-making. On the demand side, there are four attractors and four repellents that influence potential investors' decisions. In the quantitative strand of the study, we offer the following questions: (1) To what extent do investment decision perception impact foreign direct investment (FDI) inflows? And (2) To what extent do the investors from Europe and North America and investors from Asia and Africa (the West and the East) influence what factors matter in foreign direct investment (FDI) decisions? The samples consist of 269 individuals from the private sector, both in Nigeria and in the diaspora that participated in the survey. I use structural equation modeling to find that Return on Investment (ROI), Security/Personal Safety, and Investment Facilitation Services have a significant direct effect on the FDI decisions. A post hoc exploratory analysis indicates positive relationships between Ease of Doing Business and Investment Promotion and FDI are significant for investors from the investors from Europe and North America as well as the negative impact of Corruption. In contrast, the positive relationship between Return-On-Investment and FDI is more substantial for investors from East Asia and Africa. The next part of the quantitative strand investigates (1) to what extent investment promotion services and Investment Facilitation effects in the receiving country shape positive investment decision outcomes, and (2) to what extent investment perceptions and related decisions vary across industry groups facing different investment horizons and risk levels. The analysis indicates that the Investment Promotion services significantly mediate Corruption Perceptions and Investment Facilitation services. And Investment Facilitation does moderate the effect of Investment Promotion. The exploratory industry-level analysis reveals that the effects of Return On Investment to FDI decisions and Security to FDI decisions significantly differ across Infrastructure-Mining/Services, Services/Agriculture-Manufacturing, and Agriculture-Manufacturing/Infrastructure-Mining industries suggesting significant Industry-level effects. Generally, these findings reveal much more refined and complex dynamics of FDI inflows and how individual investor’s perceptions shape them. Specifically, the results provide deeper insights into the investor’s risk perceptions that arise in a particular country. This depends on holistic perceptions of the country’s economic, political, and social environment, and also the investor’s time horizon and risk preferences signaling significant individual and situational differences in how decision-makers approach FDI.
Kalle Lyytinen, Ph.D. (Committee Chair)
Bo Carlsson, Ph.D. (Committee Member)
Philip A. Cola, Ph.D. (Committee Member)
Yunmei Wang, Ph.D. (Committee Member)
220 p.
Management
foreign direct investment; FDI attractors return on investment; ROI; investment decision-making; ease-of-doing-business; Corruption; security; perception; Nigerian Investment Promotion Commission

Recommended Citations

Citations

  • Yusuf, M. A. (2020). What drives individual decision-making of Foreign Direct Investments (FDI) to Sub-Saharan Africa [Doctoral dissertation, Case Western Reserve University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=case1595283544911804

    APA Style (7th edition)

  • Yusuf, Mukhtar. What drives individual decision-making of Foreign Direct Investments (FDI) to Sub-Saharan Africa. 2020. Case Western Reserve University, Doctoral dissertation. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=case1595283544911804.

    MLA Style (8th edition)

  • Yusuf, Mukhtar. "What drives individual decision-making of Foreign Direct Investments (FDI) to Sub-Saharan Africa." Doctoral dissertation, Case Western Reserve University, 2020. http://rave.ohiolink.edu/etdc/view?acc_num=case1595283544911804

    Chicago Manual of Style (17th edition)

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This open access ETD is published by Case Western Reserve University School of Graduate Studies and OhioLINK.