For example, multinational business activity occurs at very low levels in sub Saharan Africa, even though there are rich potential markets in a region of more than 700 million people. This often is attributed to high political risk and lack of economic development; however, multinationals operate in other risky, underdeveloped markets, many of which were largely ignored only a decade earlier. Why continue to over- look Africa? One explanation is that(a) many African markets are little known and potentially highly volatile and(b) the lack of distribution infrastructure implies that much of what the manufacturer does to distribute will be idiosyncratic in that market. The combination of uncertainty and specificity, as opposed to uncertainty alone, may help explain low investment in Africa (of course, many other factors contribute to the phenomenon as well). In contrast, some politically risky Asian countries have better distribution infrastructures, permitting multinationals to find qualified third parties already operating in the market. With specificity removed, uncertainty can be handled by outsourcing, encouraging more market entry.
It is noteworthy that market entry by some firms encourages more entry and that it does so by reducing specificity. Once a number of multinational corporations (MNOs)