Implementation of Foreign Direct Investment as an Internationalization Strategy by Kenyan Firms in the East African Community
Abstract
Firms in developing countries have in the recent past adopted foreign direct investment as
a strategy to expand its market and increase revenues. The ideology of the East African
Community has also come of age in the recent years with the formation of the new EAC
which increases the number of members of the EAC to five from the original three. This
study focused on the experiences of Kenyan firms implementing FDI in the EAC,
together with the challenges that the firms have gone through and the factors that have
promoted successful implementation of the same. The study adopted a census survey
research design and the population of the study comprised of 34 Kenyan firms that have
invested in the EAC. Primary data was collected by use of questionnaires. The study
found out that most Kenyan firms are satisfied with the level of success of their
investment in the EAC and that foreign direct investment was the right strategy for the
firms in their quest to internationalize. It was also found out that the involvement of
senior level management is important for successful implementation of foreign direct
investment together with the firms experience in the home market. Of the challenges of
implementation of foreign direct investment beuracracies and duplicity of government
agencies, corruption and regulations were found to be the major challenges while
geographical proximity, host governments openness to foreign direct investment and
protection of foreign investors were the factors that promoted successful implementation
of foreign direct investment. Finally it was concluded that more still needs to be done to
promote FDI within the EAC. The study recommends that further research could be
carried out to identify industry specific factors that promote and pose challenges to the
successful implementation of foreign direct investment by Kenyan firms. Another
possible area of research would be to identify other firms not covered in the research and
find out their experiences and challenges.
Citation
Master Of Business Administration, University Of Nairobi , 2013Publisher
University of Nairobi School of Business