Unlocking Loyalty: The Crucial Role of the Host Country Technological Business Environment for Transnational Corporations

Abstract

Foreign companies, including transnational corporations (TNCs), have demonstrated disloyalty toward their hosts in Sub-Saharan Africa (SSA) by, among other things, scaling back strategic expansion plans, closing productions, moving operations and shifting income-generating activities to different countries. Therefore, this study explores the impact of the host country's technological business environment (TBE) on TNC loyalty towards the host country, Tanzania. Data was collected from 131 executives of TNCs in Tanzania using a crosssectional survey questionnaire. The measurement model was evaluated using confirmatory factor analysis. The hypotheses were empirically tested using hierarchical regression analysis. Findings reveal that a robust TBE significantly enhances TNC loyalty, with specific elements like local production processes, innovativeness, information system infrastructure, IT competency, IT support services, and technological equipment usage having a positive impact. However, TNC loyalty is not affected by R&D or systemic integration. These results not only deepen the theoretical understanding of TNC loyalty but also fill an existing gap by linking it to TBE. The study suggests that policymakers should focus on strengthening key components of the TBE to nurture and maintain TNC loyalty. In Tanzania, this involves ensuring high-quality, knowledge-intensive production systems, well-developed information system infrastructure, elevated computer literacy and competency levels, robust IT support services, advanced technological equipment usage, and a culture of innovativeness.