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

Okeahalam, C.Charles and Wood, Steve (2009) Financing internationalisation–a case study of an African retail transnational corporation. Journal of Economic Geography, 9, (4), 511-537. (doi:10.1093/jeg/lbn056).


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Economic geographers are directing increasing attention to international expansion by leading retail transnational corporations (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-Saharan Africa, so far none have opened stores on the continent. Therefore, in this article we analyse expansion into sub-Saharan Africa by a second tier retail TNC (Shoprite) and explore its financing strategy. We find that the food retail sector in sub-Saharan 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
Digital Object Identifier (DOI): doi:10.1093/jeg/lbn056
ISSNs: 1468-2702 (print)
1468-2710 (electronic)
Subjects: D History General and Old World > DT Africa
H Social Sciences > HC Economic History and Conditions
Divisions : University Structure - Pre August 2011 > School of Management
ePrint ID: 178229
Accepted Date and Publication Date:
January 2009Published
Date Deposited: 23 Mar 2011 15:44
Last Modified: 31 Mar 2016 13:34

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