Qualitative analysis for joint ventures as an entry mode in foreign direct investment

Abstract

The present article examines foreign direct investment (FDI) in Algeria. The study explores how legal constraints on social capital formation, in conjunction with trade restrictions, condition companies’ international investment strategies and the attractiveness and implementation of investments in Algeria. These factors affect the diversification of the economy and the business climate. The empirical analysis was performed using a sample of 62 joint ventures (JV) in Algeria for the period 1990 to 2019. The JVs were established by companies from 14 countries. The analysis was performed using fuzzy-set qualitative comparative analysis (fsQCA). The 49/51 rule, combined with increasing restrictions, has affected two groups of companies differently. The first group consists of companies that the Algerian government considers necessary for the diversification of the economy. This group essentially consists of companies in the manufacturing sector, which have shifted from the commercialization to the assembly of products in Algeria. The second group consists of oil and gas companies, which have not undergone changes in the way they access the Algerian market.