Organizational Identity as an Antecedent of International Expansion: The Internationalization Challenge of South Africa Banks

Abstract

The possession of intangible assets has long been assumed as the major driver of international expansion and the factor that gives rise for the multinational company. The growth trajectory of South Africa banks does not conform with this theoretical prediction. In spite of the evident possession of vast and powerful stock of intangible assets, coupled with the presence of powerful pull and push factors for international expansion, these firms have remained predominantly domestic, with small and meager activity outside their home country. Exploratory study of these banks suggests that their organizational identity, with its antecedents in the characteristics of the home country, has been confining their ability to observe opportunities outside the home country and develop the capabilities required to exploit them. We develop a theory of the impact of organizational identity on international growth and suggests that it has to be recognized in MNE theory as a critical condition for international growth.

Keywords: identity theory, South Africa, banks, internationalization, home country impact

JEL Classification: M16, M14, M21