How local dealers benefit from their international participation: evidence from Africa

Abstract

PurposeAlthough the prior literature has identified the relevance of dealer participation for multinational enterprises (MNEs), it is unclear whether such participation could also be an important means for local dealers to learn from MNEs. By adopting local firms’ viewpoint, our study draws on organizational learning theory to examine how local dealers benefit from their participation with foreign suppliers in Africa.Design/methodology/approachThe empirical setting is a combinative dataset of secondary data and primary survey of 164 small- and medium-sized local dealers with nine subsidiaries of a Chinese motorcycle company in six countries of Sub-Saharan Africa.FindingsThis research shows that dealer participation is positively associated with dealer performance, and this positive effect is stronger when local dealers operate in regions with low government corruption and high government support. However, the positive relationship is weaker when local dealers use the local tongue extensively but becomes stronger when their foreign suppliers have a high dealer coverage.Originality/valueBy taking a local-participant perspective, our study extends the participation literature to show how firms from a resource-constrained region may benefit from their proactive participation with foreign counterparts. Additionally, we identify the boundary conditions of institutional factors and strategic choices of local dealers and foreign suppliers, providing a nuanced understanding of firm behaviors in complex and uncertain markets.