Artificial states, ethnicity, and the survival of private participation infrastructure projects in Africa

Abstract

Despite increasing interest, research within the context of Africa, particularly in relation to its unique historical dynamics, remains relatively underexplored in international business (IB). ​Our paper explores how colonial-era historical legacies continue to shape the outcomes of present-day private participation infrastructure (PPI) projects in Africa. By analyzing 301 PPI projects across 102 ethnic groups in 32 African countries, we offer insights into how borders misaligned with pre-colonial ethnic boundaries contribute to conflicts that undermine project viability. The findings reveal that ethnic partitioning, defined as the division of ethnic groups across artificial national borders, negatively impacts PPI project survival, with conflict mediating this relationship. While higher institutional quality mitigates these adverse effects, its impact remains marginal. We incorporate historical perspectives and highlight the importance of considering the path dependence of contemporary institutional environments. It also addresses the growing demand for Africa-focused IB research. By incorporating ethnicity into institutional analyses, our study also challenges the traditional IB assumption regarding the primacy of national borders in business activities. Our study points to the importance of understanding historical backgrounds when doing business in Africa.