The influence of political risk factors on the internationalization decisions of horticultural exporting firms in Nairobi
The internationalization of firms has been studied extensively. Political risk and its analysis have changed over the last few decades. According to a study by Meyer (2003; p. 223), “Political risk has been a major concern of international business scholars up to the 1970s, yet this line of research has become rather quiet in recent years. Maybe, businesses found the world rather predictable between „Iran 1979‟ and „Indonesia 1997.‟ Yet, the end of the cold war has not eliminated political risk.” Another study by Lettice and Jan-Erik (2004) on small firms‟ internationalization for development in Tanzania found out that as barriers to globalization continue to fade, while powerful internationalization of production and marketing continue to thrive all over the globe, African businesses should realize that competing globally is not an option, but an economic imperative. However, the political risk assessment in the internationalization decisions of horticultural exporting firms, especially from a developing country perspective, has received little attention in academic inquiry. The primary purpose of this study was to identify salient political risk factors that influence export decisions and the internationalization decisions of horticultural exporting firms in Nairobi and to evaluate the relative importance of political risk factors inherent in the internationalization decisions of horticultural exporting firms in Nairobi. The study used both Primary and Secondary data. Structured questionnaire consisting of both open-ended and closed ended questions were used. Pertinent data were collected from the top-level management of the Horticultural firms in Nairobi at their headquarters. The Horticultural firms targeted officials for interviewing were the head of marketing. The response rate was 62.5%. The data was analyzed using descriptive statistics. The open-ended and closed ended questionnaires enabled the respondents to give as much information as possible without any form of limitation. The researcher designed the Questionnaire on the basis of the objective of the research and the study‟s literature review. The primary data was supplemented by secondary data from the existing records of Ministry of Agriculture, Trade, Journals and Internal circulars. viii The study findings established that the most important political risk factors such as; Degree of red tape in host country government (e.g., excessive administrative layers and corruption); Capital outflow restrictions (e.g., restrictions on repatriation of funds and currency convertibility); Marketing capability; Technological supportiveness and Legal protection whereas: Attitude of host country toward foreign business; Stability of foreign exchange rates and relative prices in host country (e.g., unexpected currency devaluation, inflation); Extent of regional and international cooperation of host country (e.g., border disputes, political refugees, position on international issues) were seen as the major concern for the decision making by participating horticultural firms when internationalizing their products. The findings also revealed that the participating firms had a lot of concern in the area of Political risk factors that incorporated both the economic and political dimensions and the internal (domestic) and external (foreign) dimensions. The two economic and political dimensions factors were rated highly an indication of how influential they are to the operation of the business internationally.