The reciprocity objective! The economic business environment and transnational corporations loyalty to the host country in Tanzania

Abstract

AbstractForeign companies, including transnational corporations (TNCs), have shown disloyalty toward their hosts in sub-Saharan Africa by, among other things, scaling back strategic expansion plans, closing operations, and shifting income-generating activities to different countries. Therefore, the current study examines the influence of the economic business environment on TNCs’ loyalty in Tanzania. Using a cross-sectional survey design, data was collected from 131 executives of TNCs in Tanzania. The measurement model was verified by confirmatory factor analysis. Hypotheses were tested using hierarchical regression analysis. Results indicate that through income level, saving rate, consumer confidence level, and employment rate, the economic business environment of the host country has a positive and significant influence on TNC loyalty towards the host country. The labor costs have a negative and significant influence on TNC loyalty. TNC loyalty, however, is not significantly influenced by interest rates or excise duty. The current investigation’s findings contribute to the theoretical concept of loyalty, close a gap in the literature, and make an effort to advance knowledge of the host nation’s economic business environment’s effect on TNC loyalty. Policymakers should ensure policies that elevate key aspects of the economic business environment, specifically high income, savings rates, consumer confidence, employment rates, and policies that lower labor costs.

Keywords

• Economic business environment
• transnational corporations
• loyalty
• reciprocity
• host country
• Tanzania