Portfolio configuration and foreign entry decisions: A juxtaposition of real options and risk diversification theories

Research Summary Research on foreign market entry has rarely considered that multinational firms' new entries may be affected by the configuration of their existing affiliates. We argue that in making entry decisions, firms take into account how an entry into a new location helps increase the operational flexibility of their affiliate portfolios due to options to switch operations across affiliates in case of diverging labor cost developments across host countries. We juxtapose this real options‐based explanation with a risk diversification explanation. Analysis of Japanese multinational firms' foreign entry decisions suggests that the two explanations are complementary. We also establish portfolio‐level boundary conditions to the influence of operational flexibility considerations on entry, in the form of product diversification and the nature of dispersion of labor cost levels. Managerial Summary When deciding on whether to enter a foreign market, managers of a multinational firm are intuitively aware that they need to consider how the economic environment of the target host country is related to the environments of the existing countries in which the firm operates. The less the environments are correlated with each other, whether in terms of input cost or market demand conditions, the greater the chance that the firm may capture cost savings and reduce sales volatility globally. These benefits arise from a switching option to shift operations flexibly across countries and from an ability to reduce risk by holding a portfolio of diversified global investments. Our findings support both sets of considerations, suggesting that companies do give due attention to correlations in labor cost and market demand between the target host country to enter and the existing host countries

Exporting contradictions: the expansion of South African agrarian capital within Africa

Agrarian change in South Africa over the past two decades has seen consolidation of the hegemony of large-scale commercial farming and corporate agribusiness within agro-food systems. Constrained domestic demand and growth opportunities elsewhere have driven both farming and agribusiness capitals to move into other African countries, attempting to reproduce agro-food systems similarly centred on the dominance of large capital. This is evident in five areas: first, the financialization of agriculture and ‘farmland funds’; second, multinational and South African input supply industries; third, large-scale land deals to expand industrial farming systems; fourth, the export of South African companies’ food processing, manufacture, logistics and distribution operations; and fifth, the expanding reach of South African supermarkets and fast food chains. Regional expansion involves South African agrarian capital encountering substantial obstacles to entry, and challenges mounted by competitors in destination markets. Success as a regional hegemon in Africa’s agro-food system is thus far from assured, and even where it does appear to succeed, generates contradictions, and rising social tensions of the kinds experienced in South Africa itself

Must Land Reform Benefit the Victims of Colonialism?

Appealing to African values associated with ubuntu such as communion and reconciliation, elsewhere I have argued that they require compensating those who have been wronged in ways that are likely to improve their lives. In the context of land reform, I further contended that this principle probably entails not transferring unjustly acquired land en masse and immediately to dispossessed populations since doing so would foreseeably lead to such things as capital flight and food shortages, which would harm them and the broader society. Oritsegbubemi Anthony Oyowe has recently argued against my claim that land reform should be enacted in a way expected to benefit victims of colonialism while not greatly burdening innocent third parties, instead supporting the return of land to its rightful owners regardless of how the manner in which it were done would affect people’s quality of life. Here I expound Oyowe’s argumentation and respond to it in defence of my initial position, appealing to examples from southern Africa to illustrate

Contemporary South African Urbanization Dynamics

Abstract The paper provides an overview of urbanization patterns and trends in the current era in South Africa, focusing in particular on the key dynamics and driving forces underlying migration and urbanization. It considers overall demographic trends with regard to migration and urbanization, and points to some of the difficulties with data, and with the analysis of trends and patterns. The paper explores the changing rural context and dynamics, and some of the significant processes in this context: large-scale displacement of black people off farms, the impact of land reform, and conditions in the former homeland areas. Circular migration continues to be an important way in which households in rural areas survive, but some are unable to move, and are falling out of these networks. International migration—the consequence of both conditions in the home country and the draw of the South African economy— is another significant process fuelling mainly urban growth. The paper demonstrates the importance of cities in terms of economic growth and employment, and thus their attractiveness to migrants. Continuing migration to cities is of course a challenge fo

Poverty and 'Second Economy' in South Africa: An Attempt to Clarify Applicable Concepts and Quantify Extent of Relevant Challenges

In brief, the paper firstly summarises old and new theoretical and technical issues on measuring poverty, secondly analyses poverty from different perspectives and highlights various research findings on poverty trends in South Africa and thirdly clarifies the notion of "second economy" and attempts to "measure" it