Handbook of Research on International Strategic Management
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Handbook of Research on International Strategic Management

Edited by Alain Verbeke and Hemant Merchant

The Handbook provides an impressive state-of-the-art overview of the international strategic management field as an area of scholarly inquiry. The great strength of the work is the thoughtfulness of the messages conveyed by the expert team of authors.
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Chapter 12: What can international finance add to international strategy?

Lars Oxelheim, Trond Randøy and Arthur Stonehill


The 1980s and 1990s saw a remarkable increase in international financial integration of many OECD countries but left many small emerging and developing countries outside this ‘global’ financial market. In the integration process as described in Oxelheim (1996), the Nordic economies were able to foster a large number of high-growth capital-intensive companies, such as Nokia from Finland, Ericsson from Sweden, and Novo-Nordisk from Denmark. We argue that without the skillful global financial strategies that enabled these companies to access global savings, the limited domestic availability and high cost of capital would have hampered their growth. We suggest that these companies’ historical accounts provide valuable insight for scholars as well as for executives today, in particular for smaller and medium-sized growth-oriented firms from emerging economies. In order to succeed in a global financial market, firms’ executives must be capable of delivering the strategy story to the stock analysts and, ultimately, share value to the money managers (Useem, 1998). We find that Useem’s argument is equally true today. The ongoing globalization of equity markets provides the firm the opportunity to actively reduce information and agency costs, and hence to contribute to higher firm values by the means of lower cost of capital (Bekaert and Harvey, 2000; Doidge et al., 2004; Hearn et al., 2010; Mittoo and Zhang, 2008) and better corporate governance (Coffee, 2002; Oxelheim and Randøy, 2003).

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