Effect of Foreign Direct Investment on Operational Efficiency in Ethiopia’s Beer Industry: A Comparative Study of Heineken Ethiopia, Dashen Brewery, and Habesha Brewery
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Date
2026-01-01
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Adiss Ababa University
Abstract
This study investigates the impact of FDI on operational efficiency in Ethiopia's beer industry through three firms: a wholly-owned multinational subsidiary (Heineken Ethiopia), a foreign dominant joint venture (Dashen Brewery), and a locally-influenced firm with technical partnerships (Habesha Brewery). Using a quantitative research design, data were collected from 298 operational employees and analyzed through multiple regression. The results indicate that although FDI-driven infrastructure and technology transfer positively influenced efficiency, knowledge management practices proved to be the strongest predictor across all ownership models (β = 0.541–0.587, p < 0.001).More importantly, the major route to efficiency varied depending on the ownership arrangement, such that in the joint venture, the major force was institutionalized knowledge systems (β = 0.452, p < 0.001), while in the technical partnership, the role was distinctive although small (β = 0.136, p = 0.013). These findings make clear that the effect on efficiency that follows the entry of FDI is indirect and depends on institutional absorptive capacity that is in turn shaped by the respective ownership arrangement. This research concludes that institutionalized knowledge systems are important to institutionalize, and that policymakers should structure FDI incentives around train-and-link programs to maximize efficiency spillover effects.
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: Foreign Direct Investment, Operational Efficiency, Technology Transfer, Knowledge Management, Absorptive Capacity, brewery industry, and Ethiopia