Social business environment and transnational corporations’ loyalty: the executives’ perceptions in Tanzania

Abstract

The economic growth of the host low-income countries, which depends on foreign investments, among other things, has been impacted by the disloyal behaviours of foreign firms, including transnational corporations (TNCs). The demonstrated disloyal behaviours include the closure of operations and productions, scaling back expansion plans, and shifting income-generating operations to other countries with favourable business settings. This study examines the influence of the social business environment (SBE) on TNCs loyalty towards the host country, Tanzania. A cross-sectional design was employed to collect data from 131 TNCs in Tanzania using a structured questionnaire. The hypotheses were tested by hierarchical regression analysis. Findings reveal that the SBE has a positive and significant effect on TNCs loyalty through social attitudes, language, consumer preferences, and attitudes towards foreign businesses. Other dimensions of SBE, including age structure, gender roles, and the population’s literacy level, have negative and insignificant effects. Among all dimensions of the SBE, language is the best predictor of TNCs loyalty in Tanzania, followed by social attitudes, customer preferences, and attitudes of society towards foreign businesses. Based on the results, it is suggested that policymakers establish consistent social policies that encourage favourable social attitudes and beliefs, local and international language usage and proficiency, predictable customer preferences, and amicable attitudes of society towards foreign businesses to stimulate high TNC loyalty in Tanzania, which is crucial for sustainable economic development.