Abstract
Internationalisation is key to firms’ growth and financial sustainability. Firms expand globally for various reasons, such as seeking growth, new opportunities and market share. South African multinationals take advantage of increased global interconnectness and pursue international opportunities to grow global market share and generate profits. However, internationalisation is challenging due to global market fluctuations, fierce competition and regulatory uncertainties. Some South African firms have suffered internationalisation failures, yet the underlying reasons lack sufficient empirical investigation. This study addresses this knowledge gap by seeking to understand the causes of and the reasons for internationalisation failures of South African firms.
The secondary objectives were to identify the issues that South African firms take into account when they consider their readiness for global expansion and internationalisation; to ascertain how South African firms screen countries as potential markets for internationalisation and identify target markets; to determine the entry strategies that are used by South African firms during the internationalisation process; to explore how South African firms conduct an assessment of industries and sectors with market growth potential; to understand how South African firms assess the suitability of their products and services for global markets; to determine how South African firms estimate sales potential of their products and services for new global markets and lastly to explore and understand the reasons why some internationalisation efforts by South African firms are unsuccessful.
The interpretivism paradigm was applied, which assumes reality to be subjective and understood through individuals’ views and experiences. A qualitative approach was employed. The sample included seven firms, three from retail, two from banking, one from insurance and one from the energy and chemicals sector. Data was collected through in-depth semi-structured interviews of 43 executives and analysed using qualitative content analysis.
The study empirically demonstrates that South African firms’ failures in global expansions stem from a complex interplay of internal firms' weaknesses and external international business environment difficulties. Key findings reveal that South African firms internationalise to achieve growth, financial sustainability and resource...