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Financing internationalisation: a case study of an African retail transnational corporation

Wood, S and Okeahalam, C (2009) Financing internationalisation: a case study of an African retail transnational corporation Journal of Economic Geography, 9 (4). 511 - 537. ISSN 1468-2702

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Abstract

Economic geographers are directing increasing attention to international expansion by leading retail TNCs. However, there has been minimal examination of the financing methods of these firms and, while the major retail TNCs have supply relationships in sub- Sahara Africa, so far none have opened stores on the continent. Therefore in this paper we analyse expansion into sub-Sahara Africa by a second tier retail TNC (Shoprite) and explore its financing strategy. We find that the food retail sector in sub-Sahara Africa is experiencing strong growth with high financial returns. We identify a pecking-order to financing the firm - with a preference for internal funding through retained earnings preceding long-term debt, and limited issuance of equity as a last resort. Given the efficiencies of debt financing, this preference is interpreted as reluctance to dilute returns to shareholders and as a pragmatic approach to financing expansion in ‘particularistic’ business environments.

Item Type: Article
Additional Information: This is a pre-copy-editing, author-produced PDF of an article accepted for publication in Journal of Economic Geography following peer review. The definitive publisher-authenticated version Journal of Economic Geography 2009 9: 511-537 is available online at the Journal of Economic Geography website.
Divisions: Faculty of Business, Economics and Law > Surrey Business School
Depositing User: Symplectic Elements
Date Deposited: 03 May 2012 16:11
Last Modified: 23 Sep 2013 19:12
URI: http://epubs.surrey.ac.uk/id/eprint/209760

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