Abstract
Business Model Innovation (BMI) involves a company's exploration of new business strategies and techniques to create and capture value for stakeholders, devising innovative ways to generate profits and develop value propositions for consumers, partners, and suppliers. In emerging economies, business models often differ from those in developed economies due to variations in consumer behavior, contextual factors, and institutional norms. Consequently, multinational enterprises (MNEs) entering Sub-Saharan Africa, particularly Nigeria, should not simply replicate their existing business models but rather adapt and incorporate innovative changes to their value creation and value capture processes to succeed in these markets.
This research aims to examine how informal institutions, such as incentives, impact the BMI of MNEs when entering Sub-Saharan Africa. The study focuses on two advanced economy MNEs, Sabre and Amadeus, operating in the travel industry within Nigeria. Through semi-structured interviews with key employees, each with substantial experience in the travel industry, the research delves into how these MNEs have adapted and innovated within Nigeria's institutional environment.
While previous studies have primarily concentrated on emerging economies in East Asia, such as China and India, this research offers a fresh perspective by exploring the use of incentives as an informal institution to foster relationships between MNEs and local firms in Nigeria. The study reveals that incentivization plays a significant motivational role for local firms, influencing their willingness to engage in business with foreign firms seeking success in their market. This investigation sheds light on the unique dynamics of the global distribution system (GDS) in the travel industry, highlighting how these MNEs have adjusted to Nigeria's institutional environment where the use of incentives is intrinsic.
In conclusion, this research contributes to institutional theory by presenting insights into the influence of informal institutions, specifically incentivization, on MNEs' business model innovation in Sub-Saharan Africa. The findings underscore the importance of understanding and incorporating local practices and incentives when operating in diverse emerging markets, offering valuable guidance for MNEs seeking successful market entry and long-term growth.
Keywords: BMI, Informal institutions, Emerging economies, MNEs, Local firms, GDS.