Rwamuhu u, Mshindi And ew; Magai, Pe o Sau i
A icle
The ecip oci y objec i e! The economic business
en i onmen and ansna ional co po a ions loyal y o he
hos coun y in Tanzania
Cogen Business & Managemen
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Sugges ed Ci a ion: Rwamuhu u, Mshindi And ew; Magai, Pe o Sau i (2024) : The ecip oci y
objec i e! The economic business en i onmen and ansna ional co po a ions loyal y o he hos
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The ecip oci y objec i e! The economic business
en i onmen and ansna ional co po a ions
loyal y o he hos coun y in Tanzania
Mshindi And ew Rwamuhu u & Pe o Sau i Magai
To ci e his a icle: Mshindi And ew Rwamuhu u & Pe o Sau i Magai (2024) The ecip oci y
objec i e! The economic business en i onmen and ansna ional co po a ions loyal y
o he hos coun y in Tanzania, Cogen Business & Managemen , 11:1, 2318808, DOI:
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2024, VoL. 11, no. 1, 2318808
The ecip oci y objec i e! The economic business en i onmen and
ansna ional co po a ions loyal y o he hos coun y in Tanzania
Mshindi and ew wamuhu ua and Pe o sau i Magaib
ain e na ional Business Depa men o Business adminis a ion and Managemen , College o Business and economics,
he uni e si y o Dodoma, anzania; bin e na ional ade and economics, in e na ional ade and economics Depa men
o gene al Managemen , uni e si y o Da es salaam Business school (uDBs) uni e si y o Da es salaam, anzania
ABSTRACT
Fo eign companies, including ansna ional co po a ions ( ncs), ha e shown disloyal y
owa d hei hos s in sub-saha an a ica by, among o he hings, scaling back s a egic
expansion plans, closing ope a ions, and shi ing income-gene a ing ac i i ies o
di e en coun ies. he e o e, he cu en s udy examines he in luence o he economic
business en i onmen on ncs’ loyal y in anzania. Using a c oss-sec ional su ey
design, da a was collec ed om 131 execu i es o ncs in anzania. he measu emen
model was e i ied by con i ma o y ac o analysis. hypo heses we e es ed using
hie a chical eg ession analysis. esul s indica e ha h ough income le el, sa ing a e,
consume con idence le el, and employmen a e, he economic business en i onmen
o he hos coun y has a posi i e and signi ican in luence on nc loyal y owa ds he
hos coun y. he labo cos s ha e a nega i e and signi ican in luence on nc loyal y.
nc loyal y, howe e , is no signi ican ly in luenced by in e es a es o excise du y. he
cu en in es iga ion’s indings con ibu e o he heo e ical concep o loyal y, close a
gap in he li e a u e, and make an e o o ad ance knowledge o he hos na ion’s
economic business en i onmen ’s e ec on nc loyal y. Policymake s should ensu e
policies ha ele a e key aspec s o he economic business en i onmen , speci ically
high income, sa ings a es, consume con idence, employmen a es, and policies ha
lowe labo cos s.
1. In oduc ion
Fo eign in es men s globally excelled mo e han any o he o m o capi al low ac oss na ional bo de s,
eaching 1.5 illion in 2019 be o e collapsing by 42% in 2020 due o he cOViD-19 pandemic (gi oud &
azéma , 2023; Unc aD, 2021). he de eloping economies ha e been s eng hened by engaging in ans-
na ional co po a ions ( ncs) and o eign di ec in es men (FDi) a ac ions (gi oud & azéma , 2023;
Pandya, 2016). in he p esence o hese ncs, he coun ies ha e expe ienced economic g ow h, employ-
men c ea ion, sec o al g ow h, compe i ion, and p ope u iliza ion o esou ces (Magai, 2022). as o
oday, many coun ies a e aking conside able ini ia i es and becoming mo e open o a ac o eign
i ms, including ncs, by educing es ic ions, o e ing gene ous in es men incen i es, and adop ing
ag eemen s wi h global and in e na ional o ganiza ions such as he Wo ld ade O ganiza ion (W O), he
in e na ional Mone a y Fund (iMF), he Wo ld Bank (WB), bila e al in es men ag eemen s (Bias), p e e -
en ial ade ag eemen s (P as), and egional in eg a ion ag eemen s ( ias) (Pandya, 2016). he e o e, he
impo ance o ncs canno be o e looked, pa icula ly in low-income coun ies, including sub-saha an
coun ies (Xiao & ian, 2023).
Meanwhile, apa om he de eloping coun ies, s udies ha e demons a ed ha income-disad an aged
coun ies bene i e en mo e om o eign in es men o e lows, including nc income-gene a ing ac i -
i ies conduc ed in he pa icula coun y whe e ncs a e hos ed (i šo á & ha ánek, 2013; Xiao & ian,
© 2024 he uni e si y o Dodoma
CONTACT Mshindi and ew Rwamuhu u mshindiand [email protected] in e na ional Business Depa men o Business adminis a ion
and Managemen , College o economics and Business educa ion, he uni e si y o Dodoma, anzania.
h ps://doi.o g/10.1080/23311975.2024.2318808
his is an open access a icle dis ibu ed unde he e ms o he C ea i e Commons a ibu ion License (h p://c ea i ecommons.o g/licenses/by/4.0/), which
pe mi s un es ic ed use, dis ibu ion, and ep oduc ion in any medium, p o ided he o iginal wo k is p ope ly ci ed. he e ms on which his a icle has been
published allow he pos ing o he accep ed Manusc ip in a eposi o y by he au ho (s) o wi h hei consen .
ARTICLE HISTORY
ecei ed 31 May 2023
e ised 27 Oc obe 2023
accep ed 6 Feb ua y
2024
REVIEWING EDITOR
hamida skand ani,
Uni e si y o Manouba,
he highe ins i u e o
accoun ing and Business
adminis a ion, unisia
KEYWORDS
economic business
en i onmen ;
ansna ional
co po a ions; loyal y;
ecip oci y; hos coun y;
anzania
SUBJECTS
economics; Poli ical
economy; Finance;
Business, Managemen
and accoun ing
2 M. a. WaMUhU U anD P. s. Magai
2023). he e o e, in a low-income coun y like anzania, con inued nc ope a ions, which a e equi alen
o nc loyal y, a e c ucial o economic de elopmen . in his ega d, nc business ope a ions con inui y
implies es ablishing new in es men s, ein es ing ea nings, and sp eading bene icial ecommenda ions
abou he hos coun y oppo uni ies and po en ials o o eign and in e na ional in es o s is c i ical o
anzania’s economic p ospe i y. in o de o a ac , main ain, and sus ain o eign companies as well as
ncs, hese coun ies mus p o ide a o able business en i onmen s, speci ically economic business en i-
onmen s, h ough ecip oci y du ies.
Despi e he ac ha loyal y is well known and widely empi ically examined, he concep o nc loy-
al y o he hos coun y is no documen ed in he li e a u e (Joze e al., 2019). Based on Joze e al.
(2019), nc loyal y o he hos coun y is concep ualized as he willingness o nc, as he hos coun y’s
cus ome , o con inue p op ie o ship ac i i ies wi h he hos coun y ha p o ides aw ma e ials,
esou ces, a subs an ial ma ke , and a enues ha acili a e economies o scale (Usmed e al., 2021).
Whe eas, ncs a e explained by Finge and s a in (2018) as companies o co po a ions ope a ing in
mo e han one coun y a he han hei home coun ies. in his iew, hos coun y means a o eign
coun y whe e ncs conduc business ope a ions, while home coun y is e e ed o as he coun y
whe e a nc business was bo n (Duan e al., 2022). in his ega d, ncs a e equipped wi h capi al as
well as goods and se ices, p ocesses, ade names, ma ke ing me hods, knowledge, skills, echnology,
and mos p ominen ly, p o essional managemen . his implies ha he ncs ha e golden chances, and
subs an ial esou ces o mo e ope a ions o income-gene a ing ac i i ies o coun ies whe e hey hink
he e is a mo e a o able economic business en i onmen and whe e hey can make mo e p o i s (Finge
& s a in, 2018; Medioli e al., 2023).
F ankly speaking, in ecen yea s, some coun ies in he sub-saha an economies, anzania included,
ha e shown disloyal beha io s such as he exodus o o eign i ms and educ ions in s a egic expansion
and g ow h plans (hou eld e al., 2016; kagochi & Du maz, 2018; ng’wanakilala, 2017). Fo example, ncs
ein es ed ea nings in anzania declined subs an ially be ween 2013 and 2022, by an a e age o almos
146.92% [ anzania in es men cen e ( ic), 2018, 2023]. his beha io sugges s limi ed le els o loyal y
among ncs in anzania. Meanwhile, s udies (kahya a a, 2021; ngowi, 2018; oloui, 2023) ha e connec ed
ncs disloyal y o he hos coun y, anzania, wi h low pe o mance in e ms o sales, e enues, p o i -
abili y, ma ke sha es, e ec i eness, and e iciency, which a e in luenced by he economic business en i-
onmen . acco ding o oche (2015), kahya a a (2021), and Medioli e al. (2023), o a la ge ex en , in e es
a es, income, employmen , labo cos s, and consume con idence le el ha e been known as he main
ac o s hinde ing ncs pe o mance. ha is o say, economic business en i onmen s de ine he deg ee
o success ul pe o mance o o eign i ms, ncs included (Fa ole e al., 2018). Despi e he ac ha he
economic business en i onmen in luences nc pe o mance, he e is no e idence ha shows ha nc
pe o mance ela es o nc loyal y o he hos coun y (Duan e al., 2022; Joze e al., 2019).
howe e , nc disloyal y can be associa ed wi h bo edom, aising cos s o p oduc ion, educed p o i -
abili y, and ailu e o a ain planned nc s a egic goals (kahya a a, 2021; ngowi, 2018), caused by huge
in e es a e amoun s and he highes cos s o ading ac oss bo de s in he eac egion, among o he
hings [Wo ld Bank (WB), 2019]. acco ding o a s udy by ngowi (2018) and kahya a a (2021), he
anzanian economic business en i onmen is known o i s high unemploymen a e, low sa ing a es,
e y low income le el, uns able consume con idence le el, and equen changes in go e nmen eco-
nomic policies ha o en a ec he ncs decisions and planning. On one side, Meha (2022), kho nen
(2005), and Fa ole e al. (2018) es ablished ha a poo economic business en i onmen nega i ely a ec s
p o i abili y, hus a ec ing ein es men o ea nings. acco ding o Medioli e al. (2023), uncompe i i e
economic business en i onmen s lead o ncs income shi ing o coun ies wi h compe i i e economic
business en i onmen s. his implies ha in an un a o able hos coun y’s economic and business en i-
onmen s, ncs hink o mo ing esou ces o ano he coun y wi h a o able economic and comme cial
clima es. On he o he side, he good economic business en i onmen o he hos coun y may be
expec ed o signi ican ly in luence nc loyal y owa ds he hos coun y h ough ecip ocal obliga ions.
his unde lines he u e impo ance o c ea ing and main aining an a ac i e and conduci e economic
business en i onmen as an indispensable componen o ecei ing he bene i s o ncs. Wi h his eali y,
economic business en i onmen condi ions a ec managemen decisions and planning and hus, he
a ainmen o nc pe o mance goals (egbunike & Oke ekeo i, 2018). his means ha economic business
cOgen BUsiness & ManageMen 3
en i onmen is a co e de e minan o nc business con inui y, which equa es o nc loyal y o he hos
coun y. Bu , e y li le is known abou nc loyal y o he hos coun y in he economic business en i-
onmen pe spec i e.
P e ious schola ly wo ks ha e explo ed he e ec o he hos coun y’s economic business en i on-
men on he pe o mance o ncs. Fo ins ance, egbunike and Oke ekeo i (2018) ound a posi i e and
signi ican ela ionship be ween mac oeconomic business en i onmen ac o s and he inancial pe o -
mance o ncs. simila ly, kahya a a (2021) showed ha a be e mac oeconomic business en i onmen
leads o be e pe o mance o nc i ms. also, s auss e al. (2021) documen ed ha imp o ed eco-
nomic business en i onmen s no only enhance be e nc pe o mance in e ms o e enues, e u n on
in es men , and p o i abili y bu also boos ein es men o ea nings in he hos coun y. in addi ion,
oche (2015) epo ed he ad e se e ec o highe axes and un ai axa ion on ncs co po a e pe o -
mance in he hos coun y. Mo eo e , a e al. (2021) and nazzal e al. (2023) ound a s ong ela ionship
be ween economic business en i onmen ac o s and ncs in en ions owa d in es o s. Meanwhile,
Munyo o e al. (2016) indica ed ha he poo economic business en i onmen o a hos coun y inc eases
he cos s o p oduc ion and discou ages in a- ade ans e s and c oss-bo de ade, he eby a ec ing
many egional ma ke -o ien ed ncs (WB, 2020). likewise, Medioli e al. (2023) documen ed ha un a-
o able hos coun y economic business en i onmen s o e an a enue o o eign i ms o shi income
gene a ing ac i i ies o coun ies wi h compe i i e economic en i onmen s whe e hey can immedia ely
gain om hei in es men s. Mos o hese s udies ha e indica ed ha he hos coun y’s economic busi-
ness en i onmen has a subs an ial in luence on nc pe o mance (Meha , 2022; ani & Ze gaw, 2017).
howe e , hese s udies did no demons a e how he economic business en i onmen can in luence nc
loyal y owa ds he hos coun y. ne e heless, he link be ween he economic business en i onmen
and nc loyal y o he hos coun y is no ob ious, and i has no ye been empi ically explo ed.
no wi hs anding, u he s udies such as akpo i o o and Owo u u (2018), Fa ole e al. (2018), kho nen
(2005), and Bon empo (2022) concen a ed on examining he e ec o he business en i onmen on he
pe o mance o ncs in he hos coun y. simila ly, s udies (commande & s ejna , 2011; Mwadime,
2020) epo ed a s ong, posi i e, and signi ican ela ionship be ween he business en i onmen and he
pe o mance o ncs. all hese schola s’ wo ks abo e ound a signi ican ela ionship be ween he busi-
ness en i onmen and he pe o mance o ncs. howe e , hese s udies we e oo wide in scope, as he
concen a ion o he s udies is all business en i onmen componen s ha include poli ical, economic,
socio-cul u al, and echnological business en i onmen s pu oge he (Okechukwu & Oko onkwo, 2018).
On he con a y, he cu en s udy ocuses only on he economic business en i onmen and nc loyal y
owa d he hos coun y. in summa y, based on he a gumen abo e, he connec ion be ween he a i-
ables in he p esen s udy has no ye been empi ically examined.
Besides, he loyal y o ncs may be a ibu ed o he dual embeddedness e ec o hos and home
coun y, in he sense ha ncs in eg a e in o hos -coun y socie y and keep economic and cul u al
bonds wi h hei home coun y (Duan e al., 2022). his implies ha ncs u ilize hei home coun y’s
business en i onmen while gaining access o aluable esou ces no a ailable o hei na i e-bo n coun-
y o enhance pe o mance in he coun ies whe e hey a e hos ed (colic-Peiske & Deng, 2019). Fo
example, ncs ob ain inancial suppo om hei home coun y’s banks when hey ail o secu e loans
om hei hos coun y (Duan e al., 2021). P ac ically, conside ing dual embeddedness, ncs bene i
om hei dual business en i onmen s, pa icula ly hos -and-home coun y economic business en i on-
men si ua ions (B zozowski e al., 2017; Duan e al., 2022). hus, changes in he home coun y’s eco-
nomic business en i onmen may also a ec hei new in es men decisions and ein es men o
ea nings, and hus be likely o esul in loyal y challenges in he hos coun y (Duan e al., 2022). e idence
demons a es ha hos -and home-coun y ma ke s a e e y c ucial in nc ade since any al e a ions in
expo and impo policies, ade ag eemen s, o axa ion policies be ween hos and home coun ies
impac ncs business ope a ions (Duan e al., 2022; Magai, 2022).
howe e , despi e he ac ha , loyal y o ncs owa ds he hos coun y may u he be media ed by
economic business ac o s o home coun ies, Fa ole e al. (2018) and in e na ional p oduc ion heo y (iP )
emphasize ha he hos coun y economic business en i onmen plays a key ole in de e mining nc
business success and con inui y, which equa es o nc loyal y (Dunning, 2001) h ough he ecip oci y
p ocess. Mo eo e , based on social exchange heo y (se ), i he hos coun y makes a ailable a conduci e
4 M. a. WaMUhU U anD P. s. Magai
economic business en i onmen o he nc, he nc is mo e likely o beha e a o ably by being loyal o
he hos coun y h ough he ecip oci y p inciple, ega dless o he si ua ion o he home coun y’s eco-
nomic business en i onmen (Blau, 1964; egambwage & kasoga, 2022b). speci ically, when he economic
business en i onmen in he hos coun y is a o able, ncs become success ul (kahya a a, 2021; Medioli
e al., 2023; Obo eh & a uka oha, 2021). hence, ncs demons a e loyal beha io s o he hos coun y
based on ecip oci y p inciple because posi i e ecip oci y encou ages loyal y ( egambwage & kasoga,
2022b, 2022c).
in summa y, despi e he ac ha a numbe o p e ious s udies ha e examined he ela ionship
be ween economic business en i onmen and pe o mance, none o hese s udies examined nc loyal y
owa d he hos coun y om he pe spec i e o he hos coun y’s economic business en i onmen .
also, conside ing he ecip oci y bene i s, nc loyal y is c ucial o he objec i es o bo h nc and he
hos coun y, as nc mus become mo e p o i able and accumula e weal h, and he hos coun y mus
nu u e and sus ain i s economy. he e o e, he objec i e o he cu en in es iga ion is o ill he gap by
examining he in luence o he hos coun y’s economic business en i onmen on nc loyal y o he hos
coun y. his in es iga ion is one o he i s o explo e nc loyal y owa ds he hos coun y om he
iewpoin o he economic business en i onmen o a coun y whe e ncs ope a e. he p esen s udy
aims o make a numbe o con ibu ions o he nc loyal y li e a u e. Fi s , i s eng hens he heo e ical
concep o loyal y by p oposing and es ing a model o nc loyal y owa ds he hos coun y, mos ly in
he con ex o he hos coun y economic business en i onmen . second, he s udy employs combina-
ions o heo ies, including social exchange heo y (se ) and in e na ional p oduc ion heo y (iP ) o a
p oposed and es ed model o nc loyal y o he hos coun y. hi d, his s udy ills he li e a u e gap
by linking he hos coun y’s economic business en i onmen and nc loyal y owa ds he hos coun y.
Fou h, om a eal-wo ld pe spec i e, he s udy will bene i hos coun ies, mainly policymake s in
low-income coun ies, by p o iding hem wi h an unde s anding o he c ucial di e en ial con ibu ions
o he indi idual dimensions o he economic business en i onmen on nc loyal y. his will enable
hem o imp o e go e nmen policies and p og ams ha capi alize on key economic business en i on-
men dimensions o a ac ncs, s imula e, ele a e, and sus ain nc loyal y o economic g ow h and
de elopmen . Finally, he indings on nc indus y sec o ype and expe ience help p ac i ione s ( ncs
and hei in es o s) become amilia wi h he impo ance o he indus y sec o ype o in es in and he
du a ion o nc yea s o ope a ions in o de o ealize su icien gain.
in o de o accomplish he objec i e o he cu en s udy, his in es iga ion a emp s o answe he
ollowing ques ions:
1. Does he economic business en i onmen in which ncs ope a e a ec nc loyal y o he hos
coun y?
2. Wha a e he di e en ial e ec s o indi idual dimension(s) o he economic business en i onmen on
nc loyal y o he hos coun y?
3. Wha impac do he nc in e nal speci ic ad an ageous ac o s exe on nc loyal y h ough he
hos coun y economic business en i onmen dimensions?
4. Do nc in e nal-speci ic ad an ageous ac o s ha e a signi ican in luence on nc loyal y owa ds
he hos coun y?
his s udy is o ganized in o i e sec ions: i s , he in oduc ion; second, he heo e ical and li e a u e
e iew; hi d, he me hodology; ou h, he esul s and discussion o indings; and las ly, he conclusion,
ecommenda ions, esea ch limi a ions, and u u e s udy di ec ion.
2. Li e a u e e iew
2.1. Theo e ical e iew
2.1.1. The in e na ional p oduc ion heo y
he in e na ional p oduc ion heo y (iP ) o Dunning (1977) is engaged o enligh en ncs and hei
ela ed ac s ega ding he loca ion condi ions o he hos coun y, including he economic business
cOgen BUsiness & ManageMen 5
en i onmen , among o he s (Dunning & ugman, 1985; kimiaga i e al., 2023). i explici ly explain h ee
ad an ages, commonly known as ‘Oli’ o ncs o ope a e success ul in o eign coun y, namely owne -
ship ad an age (O), loca ion ad an age (l) and in e naliza ion (i) (Dunning, 2001). acco ding o Dunning
(1977, 2001), hese h ee ad an ages mus be ul illed o nc o p ospe in he hos coun y. hus, iP
explains he d i ing o ce behind ncs in ol emen in c oss-bo de business ope a ions. i sugges s ha
he o eign i m’s, ncs included, ope a ions in he hos coun y will be success ul gi en ha he eco-
nomic business en i onmen o he coun y whe e he o eign i m ope a es is a o able. he heo y also
in o ms he ad an ages o economic business en i onmen ac o s ha enhance he nc’s pe o mance,
and access o es ic ed ma ke s and in es men incen i es such as ax elie , easy aw ma e ial and o he
esou ce acquisi ion, and low economic and inancial isk. Mo eo e , he iP e eals he e ec s o mac-
oeconomic policies such as mone a y policy in acili a ing ncs pe o mance in e ms o e enues,
e u n on in es men s, e u n on asse s, and p o i abili y.
Wi h ega d o his, iP addi ionally in o ms his s udy by p o iding he dimensions o he economic
business en i onmen such as in e es a e, income, sa ing a es, consume con idence le el, employ-
men a e, labo cos s, and axes ha in luence nc p o i abili y and e en ually nc business con inui y
in anzania (Dunning & ugman, 1985), which equa es o nc loyal y in a hos coun y. in his pe spec-
i e, o eign i ms, including ncs, conduc business in coun ies whe e hey eel hey will achie e hei
se s a egic inancial and economic goals (Medioli e al., 2023) and hence business con inui y (kimiaga i
e al., 2023; Magai, 2022), leading o loyal y owa d he hos coun y. Mo eo e , he iP p o ides an
explana ion o he o eign i m’s in e nal ad an ageous ac o s, such as size, indus y ype, and expe i-
ence o ncs in he hos coun y. acco ding o he iP , hese in e nal ac o s also play a signi ican ole
in in luencing ncs pe o mance. he e o e, in his s udy, hese ac o s a e con olled in o de o ealize
he e ec o only he economic business en i onmen on nc loyal y. howe e , iP does no demon-
s a e a clea link be ween economic business en i onmen ac o s and nc loyal y in a ecip oci y du y.
hus, he social exchange heo y was bene icial in o de o explain he link be ween economic business
en i onmen and nc loyal y h ough ecip oci y obliga ions.
2.1.2. The social exchange heo y
he social exchange heo y (se ) by Blau (1964) comp ises economic and social ela ionships ha hap-
pen when each pa y has some hing ha he o he pa y alues. se explains social exis ence in eco-
nomic and social e ms when pa ne s pe cei e he ‘ ules o exchange’, which in eg a e he dual
componen s o ecip oci y and epaymen (c opanzano & Mi chell, 2005). acco ding o se , social
exchange ela ionships a ise om a sequence o ecip ocal ansac ions be ween pa ies ha p oduce a
pa e n o obliga ions owa d one ano he (Blau, 1964). acco dingly, he deg ee o commi men o he
exis ing ela ionship is de e mined by he ongoing compa ison o social and economic ou comes be ween
a se ies o con ac s be ween pa ies and al e na i es (Blau, 1964). in o he wo ds, pa ne s keep ela ion-
ships because hey expec bene i s, which con ain a sequence o exchanges ha c ea e commi men s
h ough ecip ocal obliga ions. his sugges s ha any bene i s gained c ea e deb s ha can be com-
o ed only by ecip oca ion. hus, pa ies con inue being loyal o each o he h ough he p inciple o
ecip oci y as long as hey ob ain bo h adequa e economic and social incen i es ( egambwage &
kasoga, 2023).
in ag eemen wi h se , i he hos coun y make a ailable conduci e economic business en i onmen
o he nc, he nc is mo e likely o beha e a o ably by being loyal o he hos coun ies (Blau, 1964;
egambwage & kasoga, 2022b). speci ically, when ncs pe cei e ha he hos coun y has ha ing hei
bes in e es s a hea , by o e ing hem a conduci e economic business en i onmen in all a eas, includ-
ing consis en and a ac i e economic policy ha p omo e a o able bank in e es a es, iendly excise
du y, be e income, and low labo cos s, as well as, high sa ing a es, consume con idence le el, and
su icien employmen oppo uni ies. When economic business en i onmen is a o able, ncs become
success ul (kahya a a, 2021; Obo eh & a uka oha, 2021), and hence demons a e loyal beha io s o he
hos coun y h ough ecip oci y p inciple. his is because posi i e ecip oci y encou ages loyal y
( egambwage & kasoga, 2022b, 2022c). he e o e, he se is used in illumina ing he p oposed posi i e
e ec o economic business en i onmen on nc loyal y.
6 M. a. WaMUhU U anD P. s. Magai
2.2. Economic business en i onmen
acco ding o kho nen (2005) and Mwadime (2020), he economic business en i onmen e e s o ex e -
nal economic business en i onmen ope a ing ac o s ha ha e an in luence on he buying beha io s o
consume s and businesses. hese economic business ac o s we e axes, ees and cha ges, exchange
a es, in e es a es, income, sa ing a es, consume con idence le el, unemploymen a e, labo cos s,
and excise du y. he economic business en i onmen also comp ises ex e nal business ope a ing ac o s
ha desc ibe economic a iables and o e ex ensi e oppo uni ies o nc businesses in he hos coun-
y (kim e al., 2018). hese ac o s ha e an impac on he nc’s ope a ions ou comes since hey ha e
cos implica ions on p oduc ion, p ices o supply, expo s, and impo s o goods (kahya a a, 2021). his
implies ha poo economic business en i onmen s esul in highe cos s o p oduc ion, which lead o
low p o i abili y and e en ually may lead o disloyal beha io s.
in he anzanian con ex , acco ding o ngowi (2018) and kahya a a (2021), se en dimensions o he
economic business en i onmen a ec he pe o mance o ncs, namely, bank in e es a es, excise du y,
income, sa ing a es, consume con idence le el, employmen a e, and labo cos s. consequen ly, s ud-
ies ha e desc ibed he anzanian economic business en i onmen as cha ac e ized by he isk o high
bank in e es a es, labo cos s, and a low employmen a e, as well as di icul y in accessing inancial
assis ance, including bank c edi s [Wo ld Bank (WB), 2019; ngowi, 2018; oloui, 2023]. hese au ho s ha e
also a ibu ed anzania o ha ing he highes cos s o ading ac oss bo de s in he egion, uns able
income, low sa ings a es, and a low consume con idence le el, among o he s. ne e heless, di e en
egimes ha e been implemen ing a ying measu es o add ess he a o esaid challenges ha lead o
di icul managemen decisions and unsa is ac o y pe o mance o ncs in e ms o sales, e enues, p o -
i abili y, ma ke sha e, and co po a e image, among o he s (ngowi, 2018). his, in u n, migh be he
eason o he limi ed loyal y challenges among ncs in anzania. howe e , he e is no empi ical e i-
dence ha pe o mance ailu e o ncs in anzania lead o nc disloyal y. ne e heless, as said ea lie ,
no p io esea ch ha e a emp ed o examine he ela ionship be ween dimensions o economic business
en i onmen and nc loyal y o he hos coun y. hus, he cu en s udy aims a explo ing he link
be ween economic business en i onmen and nc loyal y o he hos coun y in ecip oci y obliga ions.
2.3. Hypo hesis de elopmen
Based on he li e a u e a gumen s e iewed abo e, i is impe us o hypo hesize ha he hos coun y’s
economic business en i onmen ac o s signi ican ly a ec nc loyal y o he hos coun y. howe e , as
men ioned ea lie , se en indi idual economic business en i onmen ac o s in luence ncs pe o mance
in anzania, namely in e es a e, excise du y, income le el, sa ing a es, consume con idence le el,
employmen a e, and labo cos s (kahya a a, 2021; ngowi, 2018). acco dingly, hese dimensions o he
economic business en i onmen a e expec ed o in luence nc loyal y in anzania. in addi ion, bo h
coe icien s and signi icance le el o he hypo heses es ing esul s o each dimension (p- alue, p < 0.05)
was used o con i m he hypo heses (cohen e al., 2018). in his ega d, he esea ch ques ions a e
answe ed, and hence, he p esen s udy objec i es a e achie ed. hus, hypo heses o his s udy a e
s a ed as ollow:
2.3.1. In e es a e
acco ding o Mwadime (2020), an in e es a e is he en i e amoun an indi idual bo owe is cha ged o
bo owing money om a inancial ins i u ion. i shows how much he cos o bo owing is (Meha , 2022).
acco ding o Meha (2022), a low in e es a e imp o es ncs in es men s, signi ican ly de e mines he
pe o mance o o eign i ms, and boos s g oss domes ic p oduc (gDP). empi ical s udies ( o example,
egbunike & Oke ekeo i, 2018; Medioli e al., 2023), p o ide e idence ha bank in e es a es in a hos
coun y a ec p oduc i e p i a e sec o s ia he cos o deb and c edi accessibili y. Medioli e al. (2023)
indica ed ha h ough mone a y policy, among o he hings, c edi issues such as in e es a es and cha ges
a ec p oduc i i y, and hus he in e es a es could a ec nc loyal y o he hos coun y. Fu he mo e,
Meha (2018, 2022) and gi haiga (2021) obse ed ha comme cial banks in e es s on he bo owed capi al
cOgen BUsiness & ManageMen 7
equi emen s o ncs a e included in he p oduc ion cos s. Based on se , his implies ha lowe comme -
cial banks in e es a es imp o es he pe o mance o ncs in coun ies whe e hey ope a e, which in u n
boos nc loyal y le el h ough ecip oci y obliga ions. hus, he s udy hypo hesizes ha :
h1: he in e es a e has a posi i e and signi ican in luence on nc loyal y o he hos coun y.
2.3.2. Excise du y
acco ding o he anzania e enue au ho i y ( a, 2023), excise du y is a ax cha ged on speci ic impo s
o locally manu ac u ed goods and se ices. i is cha ged a a ying a es based on he p oduc ion
wi hin he coun y o sale o a good (Munyo o e al., 2016). in ac , excise du y seems o be a go e n-
men mechanism o gene a ing e enues om impo s o expo s o me chandise, and i signi ican ly
con ibu es o o al e enues (Munyo o e al., 2016). howe e , some imes, such excise du ies can be
highe , making he nc-p oduced goods mo e cos ly (Mugano, 2015), causing low p o i abili y. Weak
excise du y p ac ices in low-income hos coun ies ha e a delica e and wo sening domes ic ax base ha
a ec s nc pe o mance (B en on e al., 2011; hamil on, 2009). howe e , Munyo o e al. (2016) indica ed
ha i excise du ies a e ai and simple, hey play an impo an ole in in a- ade ans e s and c oss-bo de
ade since hey discou age co up ion and he smuggling o goods. O he s udies (e.g. Mugano, 2015;
Wilson e al., 2021) ha e demons a ed ha ai ness, cla i y, and simple excise axes sa e ime and cos s,
enhance c oss-bo de ade and in a egional ans e s. in ega d o ecip oci y p inciple, iendly excise
du y acili a e e ec i eness in se ing o e seas and egional ma ke s, and boos nc p o i abili y ha is
likely o ele a e nc loyal y le el. hus, based on se , he cu en s udy assumes ha :
h2: excise du y has a posi i e and signi ican in luence on nc loyal y owa ds he hos coun y
2.3.3. Income le el
acco ding o gi haiga (2021), income is e e ed o as an amoun o money ecei ed by an indi idual, an
en i y, o any o he business, gene a ed especially on a egula basis o wo k o h ough in es men . i
is a sum o money, p ope y, o o he ans e s o alue ecei ed o e a ce ain pe iod o ime in exchange
o goods o se ices (egbunike & Oke ekeo i, 2018). in income economies, Meha (2022) es ablished ha
s ong economic coun ies ha e highe income le els. Meha indica ed ha income economies a e asso-
cia ed wi h le els o income o people and co po a e income ha can be e ained and ein es ed. his
may sugges ha an income le el de e mines he con inued in es men le el o o eign i ms, including
ncs, in he hos coun y. Wi h poo coun y economic si ua ions, ncs co po a e income may be
ad e sely a ec ed, which can a ec ncs loyal y o he hos coun y (gi haiga, 2021). he e o e, based
on se , coun ies wi h a o able economic business en i onmen in e ms o high income le els a e
expec ed o enhance he pe o mance o ncs (kahya a a, 2021; Obo eh & a uka oha, 2021), which in
u n will lead o nc loyal y h ough ecip ocal obliga ions. hus, his s udy p oposes ha :
h3: income le el has a posi i e and signi ican in luence on nc loyal y o he hos coun y
2.3.4. Sa ing a e
he sa ing a e is desc ibed by Meha (2022) as a sha e o disposable income ha is no consumed in
he inal consump ion expendi u e. i can also be de ined as household sa ings di ided by disposable
income (egbunike & Oke ekeo i, 2018). Meha (2022) also a gued ha imp o ed income in he hos
coun y plays an impo an ole in sa ing. ne e heless, egbunike and Oke ekeo i (2018) epo ed a neg-
a i e and signi ican e ec o he sa ing a e on ncs p o i abili y. howe e , Medioli e al. (2023) indi-
ca ed ha high-income economies boos sa ing a es, co po a e e ained ea nings, in es able unds in
inancial ins i u ions, and in lows o o eign in es men . his is o say, based on se , coun ies wi h high
sa ing a e a e expec ed o lead o be e pe o mance o ncs (Medioli e al., 2023), which in u n may
lead o nc loyal y h ough ecip ocal obliga ions. hus, i can be hypo hesized ha :
h4: sa ing a e has a posi i e and signi ican in luence on nc loyal y o he hos coun y
14 M. a. WaMUhU U anD P. s. Magai
business en i onmen ha e a signi ican in luence on nc loyal y. speci ically, he ou dimensions o
income le el, sa ing a e, consume con idence le el, and employmen a e exe a posi i e and signi i-
can in luence on nc loyal y based on se . Meanwhile, he indings sugges ha high income le els,
sa ings a es, consume con idence le els, and employmen a es boos nc loyal y owa ds he hos
coun y. esul s indica ed ha labo cos s ha e a nega i e and signi ican in luence on nc loyal y
h ough ecip ocal obliga ions. his implies ha he highe he labo cos s, he less loyal y ncs ha e.
his can be a ibu able o he inc ease in he cos o p oduc ion, hence he educed p o i . Meanwhile,
hese indings a e consis en wi h hose o e sin and ka akeçe (2023), issah and an wi (2017) and Mwangi
and Wekesa (2017), who ound signi ican impac s o in e es a es and employmen a es on in es men
and i m pe o mance in he hos coun y.
Besides, he di e en ial in luence o di e en dimensions o he economic business en i onmen on
nc loyal y can be c edi ed o he complex in e play o numbe o business en i onmen ac o s such
as hos coun y egula o y condi ions, s abili y o hos na ional o egional ma ke s, p ospec s o eco-
nomic g ow h, as well as, alignmen o no alignmen o nc goals and s a egies (e sin & ka akeçe,
2023). his implies ha some dimensions o economic business en i onmen a e less ele an while o h-
e s o e oppo uni ies o challenges. Mo eo e , decisions o ncs abou loyal y o he hos coun y may
u he pi o on he capabili y o adap o speci ic hos coun y economic business en i onmen condi-
ions, which may lead o a ia ions in he signi icance o hese dimensions.
likewise, hese esul s sugges ha he hos coun y’s economic business en i onmen signi ican ly
a ec s ncs s a egies and decisions, which powe ncs ope a ions con inui y in he hos coun y (e sin
& ka akeçe, 2023; issah & an wi, 2017). Mo eo e , hese indings a e consis en wi h iP heo y, which
a gues ha he hos coun y’s economic business en i onmen de e mines he p ospe i y o ncs, which
is c ucial o con inued in es men s, ein es ing o ea nings, and help ul ecommenda ions in a o o
he hos coun y.
Mo eo e , he esul s in able 4 disclose ha employmen a e is he supe p edic o o nc loyal y
in anzania, ollowed by consume con idence le el, income le el, and sa ings a e. his sugges s ha a
high le el o employmen a e, consume con idence le el, income le el, and sa ing a e a e c ucial o
imp o ing, main aining, and sus aining nc loyal y in anzania unde he ecip oci y p inciple. in he
same way, d awing on se , he be e he hos coun y’s economic business en i onmen , he mo e
p o i able ncs a e, and he e o e, hey con inue ope a ions, which equa es o nc loyal y o he hos
coun y h ough ecip ocal obliga ions. hence, he s udy unde lines he p ominence o a ela i ely be e
economic business en i onmen as a necessa y componen o sus ain nc loyal y.
Fu he mo e, he esul s ha nc expe ience and indus y ype posi i ely and signi ican ly in luence
nc loyal y ( able 4), mean ha many yea s o ope a ion in a gi en hos coun y o nc and con inuous
imp o emen in speci ic indus y sec o policies, egula ions, and guidelines boos nc loyal y o he
hos coun y h ough ecip oci y du ies. nc size has a posi i e and insigni ican impac on nc loyal y.
his means ha he size o he ncs in luences nc loyal y wi h minimal signi icance. howe e , na ula
Table 4. Di ec e ec on nC loyal y.
Model 1 Model 2
Measu emen ac o s Coe icien s d. e -Value Coe icien s d. e -Value
eBe1: in e es Ra e 0.028 0.112 0.25 0.072 0.111 0.65
eBe2: excise Du y 0.125 0.118 1.05 0.081 0.120 2.17
eBe3: income Le el 0.208 0.147 1.41** 0.163 0.144 1.13**
eBe4: sa ing Ra e 0.195 0.137 1.42*** 0.129 0.136 0.95***
eBe5: Consume Con idence Le el 0.198 0.119 1.66*** 0.220 0.118 1.86**
eBe6: employmen Ra e 0.252 0.116 2.18*** 0.270 0.113 1.27**
eBe7: Labo Cos s −0.233 0.084 −2.77*** −0.223 0.082 −2.76***
Yea s o ope a ions (expe ience) 0.205 0.072 2.85***
indus y sec o ype ( nC indus y) 0.037 0.032 1.16**
numbe o employees ( nC size) 0.081 0.090 0.9
R20.166 0.232
adjus ed R20.118 0.168
F-s a is ics 5.1*** 6.9***
**p- alue <0.05.
***p- alue <0.001.
cOgen BUsiness & ManageMen 15
and Pineli’s (2019) s udy es ablished ha some o eign i ms main ain businesses in he coun y whe e
hey ha e subsidia ies because o high swi ching cos s linked o he na u e o he asse s in es ed, e.g.,
high- alue o physically la ge indus ial equipmen and buildings, and he isk o losing business licenses,
adema ks, and o he in angible asse s acqui ed o e a pe iod o ime o local i ms. his implies ha
o eign i ms, including ncs, may be loyal o he hos coun y no because o a o able condi ions in
he hos coun y’s economic business en i onmen bu because hey lack o he op ions o he han con-
inuing o ope a e in he al eady-des ined coun y.
5. Conclusion and implica ions
he s udy empi ically explo ed he in luence o he economic business en i onmen on nc loyal y o
he hos coun y. he esul s indica e ha he economic business en i onmen exe s a posi i e and
signi ican in luence on nc loyal y h ough income le el, sa ing a e, consume con idence le el, and
employmen a e. he labo cos has a nega i e and signi ican impac on nc loyal y. howe e , he
in e es a e and excise du y ha e an insigni ican in luence on nc loyal y. among all his s udy’s
dimensions, he employmen a e is he highes p edic o o nc loyal y, ollowed by he hos coun y’s
consume con idence le el, income le el, and sa ing a e. his means ha a high le el o employmen
a e, consume con idence le el, income le el, and sa ing a e a e c ucial o s imula ing, building, and
sus aining nc loyal y o he hos coun y, anzania. hence, he achie emen o sus ainable eco-
nomic g ow h.
he cu en s udy’s esul s ha e impo an implica ions o academics as well as p ac i ione s. Fo
academics, he s udy builds up he heo e ical concep o loyal y by p oposing and es ing a model o
nc loyal y o he hos coun y by in eg a ing se and iP , speci ically om he pe spec i e o he
economic business en i onmen . no p io s udy has connec ed he hos coun y’s economic business
en i onmen and nc loyal y o he hos coun y. Meanwhile, he indings o he cu en s udy ha e
signi ican p ac ical implica ions, as ollows: Fi s , anzanian income le els can a ec he p icing o p od-
uc s and he ma ke segmen a ion s a egies used by ncs. Fo example, luxu y p oduc s may be mo e
p o i able o hose wi h highe a e age incomes, while lowe incomes may necessi a e mo e
cos -sensi i e p icing. second, in es men decisions can be impac ed by he sa ing a e; a highe a e
could poin o a de eloping domes ic inancial se ices sec o , while a lowe a e migh call o di e en
ac ics like c edi -based sales. hi d, decisions abou manu ac u ing and ou sou cing can be in luenced
by labo cos s, since lowe labo cos s could make anzania a desi able place o p oduce, while highe
labo cos s migh o ce ncs o au oma e p ocesses o look in o al e na i e ma ke s. Fou h, p oduc
demand, ma ke ing ac ics, and he launch o new p oduc s can all be impac ed by consume con i-
dence le els. While lowe con idence may esul in mo e cau ious ma ke ing and p oduc de elopmen ,
highe con idence may s imula e spending and he launch o new i ems. las ly, a high employmen a e
may esul in a compe i i e labo ma ke , necessi a ing g ea e compensa ion packages o a ac op
alen . con e sely, a low employmen a e may o e a la ge pool o possible employees. hese ac o s
migh ha e an impac on ec ui men and human esou ce ac ics. in iew o he p ac ical implica ions,
ncs can in luence he economic business en i onmen as a i al sou ce o in o ma ion o sha pen hei
s a egies and shape decisions by, among o he hings: One is ha ing close moni o ing o economic
business ac o s such as consume con idence le el, income le el, labo cos s, and employmen a e,
among o he s. wo, ine- une he p icing s a egy and assess he easibili y o expanding in o new
ma ke p ojec s and en u es. h ee, be awa e o he condi ions o he hos coun y’s local ma ke , such
as consume beha io s, egula o y amewo ks, and labo , among o he s. his p o ides an oppo uni y
o ncs o modi y goods, se ices, and dis ibu ion ne wo ks. las ly, u ilize economic da a o make
in es men isk and oppo uni y assessmen s ha enable ncs make in o med decisions on a ious
business a eas and op imize esou ce alloca ion. in ac ual ac , economic business en i onmen se es
as a compass ha guides ncs in s ee ing he complex global se ing and making decisions ha align
long e m objec i es
O e all, om a p ac ical iewpoin , he s udy will bene i hos coun ies, mainly policymake s in
low-income coun ies, by p o iding hem wi h knowledge o he di e en ial con ibu ions o indi idual
dimensions o he economic business en i onmen on nc loyal y, enabling hem o make policies
16 M. a. WaMUhU U anD P. s. Magai
ha concen a e on he main economic business dimensions o a ac , e ain, and sus ain ncs o
achie ing economic de elopmen . Mo e speci ically, policymake s should ensu e consis en policy
add essing income-gene a ing issues, s eng hening sa ings habi s, and a highe le el o consume
con idence and employmen in o de o boos and sus ain nc loyal y. Mo eo e , based on he ind-
ings he go e nmen o anzania may conside o collabo a e wi h inancial ins i u ions o o e sa ings
p og ams o c edi acili ies o encou aging consume s o sa e and in es ; in es in quali y local wo k-
o ce de elopmen p og ams o imp o e labo skills and p oduc i i y and make a mo e skilled and
compe i i e wo k o ce ha educe labo cos s o ncs in he long e m; implemen nc sa is ac ion
su eys and loyal y p og ams o gauge and imp o e nc loyal y as well gi e incen i es o new in es -
men s, ein es men s o ea ning, epea business and posi i e ecommenda ions in a o o a hos
coun y; encou age o ma ion o s a egic pa ne ships wi h local businesses and go e nmen s o gain
suppo and insigh s in o nc ope a ions and nc p e e ences; main ain a close eye on ncs and nc
loyal y p og ams as he go e nmen iden i y success ul app oaches om o he hos coun ies and
adap hem in anzania.
5.1. Limi a ions and di ec ions o u u e s udies
his s udy concen a ed on he in luence o he economic business en i onmen on nc loyal y. he e o e,
u u e esea ch should examine he in luence o o he business en i onmen dimensions ( echnological,
social-cul u al, and poli ical) on nc loyal y. his s udy was also es ic ed o se en economic business
en i onmen dimensions; u u e s udies should ocus on o he dimensions such as axes and ees, in la-
ion a e, exchange a es, and unemploymen a e, among o he s (islam, 2023). Mo eo e , he economic
business en i onmen is con ex ual in na u e (Fa ole e al., 2018); hence, u u e esea ch should con i m
he p oposed model in o he coun ies, speci ically low-income ones. in addi ion, he p esen s udy
ocused on he single hos coun y economic business en i onmen , neglec ing he dual embeddedness
e ec o he home coun y’s economic business en i onmen (Duan e al., 2022). Fu u e esea ch may
a emp o examine nc loyal y om a hos -and-home economic business en i onmen pe spec i e
based on ecip oci y obliga ions in e ms o dual en ep eneu ial ecosys ems (Duan e al., 2022). Finally,
he bibliog aphic e iew, which could b oaden insigh s and possibly in oduce o he a iables o he
model ha p e ious wo ks ha e no conside ed, was no conduc ed due o inancial and ime con-
s ain s. he e o e, his s udy sugges s u u e esea ch conside a bibliog aphic e iew and he inclusion
o o he a iables.
Acknowledgemen s
no applicable.
Au ho s’ con ibu ions
Ma : concep ualiza ion, w i ing, da a analysis, and in e p e a ion; PsM: edi ing and e iewing he manusc ip .
Disclosu e s a emen
no po en ial con lic o in e es was epo ed by he au ho (s).
Abou he au ho s
Mshindi And ew Rwamuhu u is PhD candida e a he Uni e si y o Dodoma, Depa men o Business adminis a ion
and Managemen , Dodoma, anzania, his a eas o expe ise include in e na ional business, o eign di ec in es men s
(FDis) and in e na ional ade.
Pe o Sau i Magai is a senio lec u e in in e na ional ade and economics, Uni e si y o Da es salaam Business
school, Depa men o gene al Managemen , Da es salaam – anzania. he is highly in e es ed in he a eas o ade
and economics, business managemen , p ojec managemen and o eign di ec in es men s (FDis).
cOgen BUsiness & ManageMen 17
ORCID
Mshindi and ew wamuhu u h p://o cid.o g/0009-0000-8995-3024
Pe o sau i Magai h p://o cid.o g/0000-0002-5782-7063
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