Foreign ownership and firm performance

Evidence from the South African informal sector

Bibliographic Data

ID21540887
AuthorsSegun Thompson Bolarinwa (0000-0002-6024-6569, University of Fort Hare, corresponding author), Munacinga Simatele (0000-0001-9182-2701, University of Fort Hare), Forget Mingiri Kapingura (0000-0002-5808-5612, University of Fort Hare), Forget Kapingura (University of Fort Hare)
Year2024
Volume41
Issue3
Pages588-609
Publication date2024-05-03
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueDevelopment Southern Africa (JOURNAL)
Journal identifiersISSN: 0376-835X • E-ISSN: 1470-3637
PublisherInforma UK Limited (PUBLISHER • GB)
DOI10.1080/0376835x.2024.2352061
OpenAlexW4398254096
LanguageEN
References cited36

This paper investigates the effect of foreign ownership on firm performance in the South African informal sector. Using the data of 1097 informal businesses sourced from the World Bank Enterprises Survey conducted in four Township provinces in South Africa (Gauteng, KwaZulu-Natal, Eastern Cape and Western Cape) in 2020, the paper aims to address two issues: what is the effect of foreign ownership on performance in the South African informal sector and what factors drive foreign-ownership gap in the South African informal sector if it exists? The empirical analysis uses the multivariable decomposition technique and finds a performance gap between locally and foreign-owned businesses in the South African informal sector. A decomposition of factors shows that differences in endowments can explain the bulk of the gap. Discriminatory/unexplained factors, likely capturing the business culture, also play a significant role. Caution is given when seeking to curb foreign business participation in the informalsector

Business · Economics · Foreign direct investment · Foreign ownership · Informal sector · Labour economics · Macroeconomics · Market economy · Corporate Finance and Governance · Taxation and Compliance Studies · Working Capital and Financial Performance

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