Financial Needs of Internationalized Firms

Abstract

This paper is a conceptual work on financial needs generated by the internationalization process of firms, especially non-large ones, in their life cycle. The forms of internationalization considered are trade (export and import) and foreign direct investment (FDI).A careful analysis of the literature reveals a dearth of research on this specific topic; in fact, the financial side of international business theory is poorly treated and the study of financial needs is often included in other types of financial inquiries (e.g., financial benefits, financial constraints, raising capital or credit abroad). The conceptual analysis is developed in the phases of a generic life cycle to understand whether the financial requirements for specific international actions are amplified or moderated. In the first phase of the cycle, the financial needs are amplified with respect to type of strategy chosen; the growth stage implies a continual need for cash flows; and the financial conditions of the maturity phase tend to moderate fund demands. This study is the first to explain the effects of internationalization actions on financial needs.