Is Environmental Hostility in the Eyes of the Beholder? Foreignness, Environmental Perception and Response Mechanisms in Nigeria’s Banking Industry

Abstract

Environmental hostility is posited to halt firms’ development and growth. This leads to the expectations that foreign firms that developed their capabilities in more munificent environments and are able to draw on resources via their global network to compensate for local scarcity would emerge as the predominant competitors in hostile environments. The dominance of local banks of Nigeria’s banking industry conflicts this theoretical expectation. An exploratory study points at differences between foreign and local firms in their perception of Nigeria’s environmental conditions and their subsequent responses to environmental hostility. We use this insight to advance a typology of environmental hostility distinguished by the effectiveness of response mechanisms employed by local and foreign firms to confront it, and employ it to explain variations in the competitive outcomes between foreign and local firms across environments with different types of hostility.