Locus and Revenue of Export Manufacturers: Why Extra-Regional Markets?

Despite substantial research on exporting in Africa, there has been negligible if any empirical research on a choice between regional and extra-regional markets as the locus of firms' expansion. Using multiple-case studies, this paper provides an in-depth analysis of the drivers of exports revenue from extra-regional markets. The paper also explores whether two main theories, transaction cost economics (TCE) and resource-based view (RBV) compete or complement each other in explaining the choice of this market category. Data and information from an open-ended interview with four firms and five supporting institutions show that country-specific advantages attract investors with superior resources and capabilities to lucratively exploit preferential market opportunities in extra-regional markets, particularly USA. When choosing the latter over regional markets, firms anchor their operations in the global value chains, the TCE and RBV intertwine in providing further explanations. In conclusion, this study urges governments and business managers targeting high-value markets outside Africa to tie buyer-driven industries such as clothing to similar value chains. [ABSTRACT FROM AUTHOR]