Factors driving the location investment decision of South African MNEs: Senior executives’ perceptions

As trade barriers fell, South African enterprises faced new competition in their previously protected home market. With established markets becoming saturated, multinational enterprises (MNEs) steered towards emerging markets abroad. Geographically, South Africa is an intrinsic part of Africa, and psychic distance, defi ned as consisting of, inter alia, differences in language, culture and business practices, can disturb the fl ow of business between an enterprise and the world. Physical proximity to countries makes it easier for enterprises to understand the culture and business practices, and reduces the uncertainty and risk of the new market. Perceived distance into Africa and elsewhere is also infl uenced by the specifi c consumer attributes and behaviours. Enterprises perform best in foreign markets where consumer behaviour is most receptive to a company’s goods and services. The study empirically investigated perceptions of psychic distance and foreign consumer factors in FDI decision making by senior executives of South African MNEs. The fi ndings suggest that psychic distance is relatively unimportant and foreign consumer factors relatively important in FDI decision making.Key words: Psychic distance, consumers, executive biographical factors, South AfricanMNEs, senior executive perception