business seeking legitimacy in africa: presented at ifama 2014 by dr domenico dentoni
TRANSCRIPT
Business Seeking Legitimacy in Africa:The Role of Core Strategy and Country of Origin
Dr. Domenico Dentoni, Assistant ProfessorManagement Studies Group, School of Social Sciences, Wageningen University
Dr. Verena Bitzer, Post-Doctoral ResearcherGraduate School of Business, Capetown University
Dr. Jessica Duncan, Assistant ProfessorRural Sociology Group, School of Social Sciences, Wageningen University
Mr. Dimitris Mitsopoulos, Graduate StudentManagement Studies Group, School of Social Sciences, Wageningen University
International Food and Agribusiness Management Association SymposiumCapetown, June 16th-20th, 2014
BackgoundAgribusiness in Africa:• Competitive pressure• Social, political and ecological pressure
Companies need to keep or build legitimacy in society while securing supply and/or mantain markets
Broad Question:• What are the different «legitimization strategies»
adopted by agribusiness companies in Africa today?• How do they vary, and why?
Methods: Grounded Theory (1)DATA (2010-now)
- Top 50 largest world food companies (mainly, import from Africa)
- Top 50 largest ag input and food suppliers in Africa (mainly, export to Africa)
- Top 200 largest ag-food businesses («Africa as home»)
- Secondary data on South-South investments in Africa
THEORY
• Institutional Theory & Economics
• Legitimacy and legitimization
• Business Strategy
Glaser and Strauss 1967
Legitimacy TheoryWhy legitimacy matters?• To reduce stakeholder pressure (institutional theory) • To reduce transaction costs (institutional economics)
Three major types of business legitimacy in society (Ashforth & Gibbs 1990):
In contexts of uncertainty, companies adopt «paradox strategies»: trying to achieve all three of them at same time (Scherer et al. 2013)
1) PRAGMATIC 2) COGNITIVE 3) MORAL
Methods: Grounded Theory
• Inductive Creation of Typologies (Fiss 2011)• Theoretical vs. Statistical Sampling (Yin 1984)• Within-Case and Across-Case Triangulation (Eisenhardt 1989)• Set-Theoretical Approach (Fiss 2007)
Attribute Values
Strategy for Legitimacy Moral / Pragmatic /Cognitive Legimitacy
Stakeholder Pressure Low / High
Core Strategy Procurement / Marketing / «Home»
Country of Origin Developed / Emerging / Africa
Institutional Forms Individual / Bilateral / Multilateral
Results: «Western» Companies (1)Typology 1:
«Western Sellers»Typology 2:
«Western Buyers»Typology 3:
«Western Company based in Africa»
Ex. Syngenta Ex. Unilever Ex. Nestlé
Strategy forLegitimacy
Pragmatic Moral Pragmatic
Stakeholder Pressure High High Medium
Core Strategy Expand markets in Africa
Expand supply from Africa
Expand markets and supply in Africa
Headquarter Country of Origin
1. USA, 2. Europe 1. Europe, 2. USA 1. Europe, 2. USA
Main arguments and related institutional forms
Scientific arguments supporting the adoption of new varieties of ag inputs and food ingredients
Bilateral partnerships industry/academia (IFAMA?)
Participating to societal debate on «inclusive development», «fostering entrepreneurship» and linking «farmers to markets».
Multilateral partnerships industry/NGO/civil society/academia
Arguments on «supply chain efficiency», «food security» and «job creation».
Bilateral partnerships with NGOs (including company foundations).
«South-South» and African Companies (2)Typology 4:
«South-South Investors»
Typology 5:«South-South
Sellers»
Typology 6:«African
companies»
Ex. Hubei Lianfeng Overseas Agricultural Corporation (China)
Ex. Odebrecht Agroindustrial (Brazil)
Ex. Shoprite
Strategy forLegitimacy
Pragmatic Cognitive Cognitive
Stakeholder Pressure Medium Low Low
Core Strategy Expand supply (especially land) and market in Africa
Expand markets in Africa Expand markets and supply in Africa
Country of Origin 1. China; 2. India; 3. Middle East; 4. Brazil
1. China; 2. India; 3. Brazil; 4. Middle East
1. South Africa, 2. Nigeria, 3. Kenya
Main arguments and related institutional forms
Infrastructure and finance in exchange of (mainly) land. Bilateral partnerships with Govt.
Bringing technology and increasing competition in ag-food input markets .Bilateral partnerships with Govt.
Philantropy through company foundations.No partnerships.
Conclusions
Company Core
Strategy
Company Region of
Origin
Legitimization Strategies
Institutional Forms
Broad Initial Question:• What are the different «legitimization strategies» adopted by agribusinesses in Africa
today?• How do they vary, and why?
• Businesses adopt no «paradox strategy» (Scherer et al. 2013), but «contingency strategy»
• Future research: testing and refining in two steps – interviews and survey
Thank you. Questions?
Domenico [email protected]
Management Studies GroupGlobal Center for Food Systems Innovation
Wageningen University