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On the Treatment of Finance – Specific Factors Within the OLI Paradigm

Oxelheim, Lars LU ; Randøy, Trond and Stonehill, Arthur (2001) In International Business Review 10(4). p.381-398
Abstract
This article argues that the body of foreign direct investment (FDI) literature in general and the ownership, location, and internalization (OLI) paradigm in particular would be enriched if finance-specific factors are explicitly incorporated as drivers of FDI. We suggest that financial strategies involving factors such as debt/equity swaps or equity listings in foreign equity markets affect the firm's relative cost and availability of capital, and motivate a firm's engagement in FDI. Large, research-intensive firms, predominantly resident in the USA, UK, Japan or other liquid markets, have in the literature been identified as typical prototypes of multinational enterprises undertaking FDI. These firms are assumed to have no restrictions... (More)
This article argues that the body of foreign direct investment (FDI) literature in general and the ownership, location, and internalization (OLI) paradigm in particular would be enriched if finance-specific factors are explicitly incorporated as drivers of FDI. We suggest that financial strategies involving factors such as debt/equity swaps or equity listings in foreign equity markets affect the firm's relative cost and availability of capital, and motivate a firm's engagement in FDI. Large, research-intensive firms, predominantly resident in the USA, UK, Japan or other liquid markets, have in the literature been identified as typical prototypes of multinational enterprises undertaking FDI. These firms are assumed to have no restrictions as regards their ability to achieve a competitive cost and availability of capital, a focus that has made financial capabilities and resources less of an issue in FDI research. Our article mitigates this by emphasizing the relevance of finance-specific proactive strategies for FDI to occur. We generate eight testable hypotheses based on the recognition of finance-specific factors as active drivers of value creating FDI. (Less)
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author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
FDI, Cost of capital, Financial strategies, OLI
in
International Business Review
volume
10
issue
4
pages
381 - 398
publisher
Elsevier
external identifiers
  • scopus:0042203169
ISSN
1873-6149
DOI
10.1016/S0969-5931(01)00022-1
language
English
LU publication?
yes
id
d181e8fd-4a4d-4a94-845e-2d360e827ea9 (old id 1387833)
date added to LUP
2009-04-20 12:27:27
date last changed
2018-07-01 03:41:36
@article{d181e8fd-4a4d-4a94-845e-2d360e827ea9,
  abstract     = {This article argues that the body of foreign direct investment (FDI) literature in general and the ownership, location, and internalization (OLI) paradigm in particular would be enriched if finance-specific factors are explicitly incorporated as drivers of FDI. We suggest that financial strategies involving factors such as debt/equity swaps or equity listings in foreign equity markets affect the firm's relative cost and availability of capital, and motivate a firm's engagement in FDI. Large, research-intensive firms, predominantly resident in the USA, UK, Japan or other liquid markets, have in the literature been identified as typical prototypes of multinational enterprises undertaking FDI. These firms are assumed to have no restrictions as regards their ability to achieve a competitive cost and availability of capital, a focus that has made financial capabilities and resources less of an issue in FDI research. Our article mitigates this by emphasizing the relevance of finance-specific proactive strategies for FDI to occur. We generate eight testable hypotheses based on the recognition of finance-specific factors as active drivers of value creating FDI.},
  author       = {Oxelheim, Lars and Randøy, Trond and Stonehill, Arthur},
  issn         = {1873-6149},
  keyword      = {FDI,Cost of capital,Financial strategies,OLI},
  language     = {eng},
  number       = {4},
  pages        = {381--398},
  publisher    = {Elsevier},
  series       = {International Business Review},
  title        = {On the Treatment of Finance – Specific Factors Within the OLI Paradigm},
  url          = {http://dx.doi.org/10.1016/S0969-5931(01)00022-1},
  volume       = {10},
  year         = {2001},
}