Institutions and Diversification of International Markets: A Study of Clothing Manufacturers from Tanzania and Kenya

The influence of serving different geographical markets and the respective benefits of a diversification strategy are under-researched, particularly with regard to the internationalization of firms (Zeng, Xie, Tam and Wan, 2008; Cieślik, Kaciak and Welsh, 2012). Market diversification through exporting is a cheap way of internationalization that is more commonly used by smaller firms (Kwon and Kopa, 1993; Ang, 2007), such as those found in Africa. However, variation in national institutional environments enables and constrains different strategic choices such as geographic diversification (Peng and Delios, 2006). For example, the economic policy orientation of the state, including its international trade and investment policies, its impact on shaping the development of market institutions and its interaction with entrepreneurs influence the evolution of firms in emerging economies and their international operations (Yaprak and Karademir, 2010).