Diaspora networks in micro-sized firms’ internationalization: Analysis of Finnish firms’ expansion across Sub-Saharan Africa

Africa is a demanding entrepreneurial context with enormous potential for micro, small, and multinational firms. Yet, most businesses seeking to expand their operations across African markets face varying challenges, such as a lack of local expertise & networks, other unknown risks, and a lack of potential venture capitalists keen to invest in businesses that want to expand to Africa. For example, the European Commission (EC) 2015 report on Finnish small firms’ internationalization pointed out that out of the 63% of Finnish small firms not operating outside the EU market, 28% stressed the difficulty of identifying reliable networks or partners in geographically distant markets like Africa as the main obstacle to export. Moreover, 36% mentioned high costs in settling cross-border complaints and disputes as the main obstacle. But what if businesses can minimize these challenges and expand their operations across Africa by taking advantage of African diasporas residing outside of their country of origin?

In my recent research study, I delved into the role of African diaspora ties in helping the internationalization efforts of Finnish owner-managers (with 0-9 employees) venturing into Sub-Saharan African (SSA) markets. Based on in-depth interviews and documentary evidence, this study sheds light on how Finnish owner-managers tap into African diasporas residing in Finland for:

(1) Gaining information about market opportunities in Africa.
(2) Advice about doing business in Africa, particularly on the role of community elders, including paramount chiefs and women.
(3) Identifying potential partners willing to invest in businesses that want to expand their operations across Africa.

The findings highlight the significance of developmental aid organizations in forming valuable African diaspora relationships for firms without established African diaspora connections. The study also identifies common interests that bind the African diaspora and managers:

(1) To provide decent work and employment opportunities for African locals.
(2) To provide affordable, easy-to-build, and innovative homes for locals in the target market.
(3) To provide local communities and market women with innovative storage facilities for agricultural produce.

For policy actors and business owners seeking to expand their operations across Africa, this study underlines the potential of African diaspora connections in fostering business internationalization across Africa.