Modeling the Determinants of Ethiopian State Owned Enterprises’ International Business Expansion In Emerging Markets: The Roles of Legal Framework, Political Stability, and Market Knowledge
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Date
2026-06-02
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Addis Ababa University
Abstract
The internationalization of State-Owned Enterprises (SoEs) from emerging economies represents
a rapidly growing but under-researched phenomenon in global business, particularly within sub-
Saharan Africa. While existing literature heavily focuses on private multinational enterprises or
state enterprises from major emerging markets, limited empirical evidence explains how
institutional environments and organizational capabilities jointly determine the cross-border
expansion of Ethiopian federal SoEs. This study addresses this gap by examining the direct and
interactive effects of the Home-Country Legal Framework, Host-Country Legal Framework,
Host-Country Political Stability, and Corporate Market Knowledge on the international business
Based upon Institutional Theory, the Uppsala Model, and Transaction Cost Economics, an
integrated analytical framework was developed. A quantitative, explanatory cross-sectional
research design was employed, with primary data gathered via structured questionnaires
administered to 95 senior executives, strategy directors, and legal compliance officers across
major Ethiopian federal SoEs operating under Ethiopian Investment Holdings (EIH). The
empirical model was tested using Partial Least Squares Structural Equation Modeling (PLS-
SEM) The findings indicate that both external institutional conditions and internal firm-specific
capabilities play critical roles in driving outward expansion performance. Among the examined
determinants, corporate market knowledge emerged as the primary driver of foreign market
success, highlighting the fundamental importance of experiential learning, localized
understanding, and strategic intelligence. Supportive home and host-country legal frameworks,
alongside a stable political environment in target markets, provide essential institutional enabling
conditions This study contributes to international business literature by offering empirical investigations
into the international expansion determinants of Ethiopian federal State-Owned Enterprises. By
bridging institutional and capability-based perspectives, the research extends existing knowledge
on state-capitalist internationalization in developing economies. Practically, the findings offer
actionable insights for public policymakers, Ethiopian Investment Holdings, and enterprise
executives seeking to strengthen the global competitiveness and long-term sustainability of
Ethiopian state enterprises
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Keywords
State-Owned Enterprises, International Business Expansion, Home-Country Legal Framework, Host-Country Legal Framework, Political Stability, Market Knowledge, Pls-Sem, Ethiopia