Dimensions of international joint venture activity in Ghana and Nigeria
This study investigates four key dimensions o f international joint venture (JV) activity in Ghana and Nigeria: strategic motives, host country location factors, finance and performance. These dimensions are explored in a multi-method empirical study. Drawing on official annual aggregate and project level data, the trends and patterns of FDI in Ghana and Nigeria are examined across several characteristics, trends over time, ownership type of FDI, origin of foreign investor, geographical location of projects and distribution by sector. The result shows that the more preferred mode of entry for FDI is through the equity joint venture. Primary data was collected by means of a self-administered questionnaire survey from a cross section sample of 57 JVs in Ghana and Nigeria, with partners from Western Europe, North America and Asia/Pacific. First, the relative importance of a set of strategic motives and host country location factors influencing foreign investors’ decisions to form JVs in Ghana and Nigeria are identified. The main strategic motives of the foreign partners are to overcome government-mandated barriers, risk and cost sharing and to facilitate international expansion. The study finds government policy towards foreign investors, political stability and market size as the main location factors. Exploratory factor analysis is employed to identify the underlying dimensions of strategic motives and host country location factors for the JVs. Hypotheses are then tested (using t-test or Anova) by considering strategic motives and host country factors in terms of the characteristics of the sample. Second, the manner in which JVs are financed, the relative importance of barriers to JV investment finance and the determinants of the financial structure of JVs in Ghana and Nigeria are examined. Hypotheses are tested using contingency table analysis and t-test on the relative effects of the barriers and the factors influencing the capital structure of JVs. Finally, measures and determinants of performance are examined. A multiple regression analysis is conducted to identify the main predictors of successful performance for JVs in Ghana and Nigeria. The study identifies capital adequacy, partners’ capabilities and congruity of motives and goals of the partners as important determinants of performance. A paired sample t-test was also conducted to compare the performance of JVs with host government partners and those with private sector partners, the results indicate that JVs with private sector partners are perceived to perform better.