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Capital discipline and financial market relations in retail globalization: insights from the case of Tesco plc

Author

Listed:
  • Steve Wood
  • Neil Wrigley
  • Neil M. Coe

Abstract

This article provides an in-depth study of leading transnational food retailer Tesco plc to explore how its financial management and relations with the investment community—notably its reputation for capital discipline—underpinned successful expansion. Informed by close dialogue with equity analysts, we investigate how this model deteriorated since the late 2000s with declining returns, leading to high-profile international divestitures. The analysis assesses the drivers of these difficulties, and conceptualizes them. It examines how the retailer, pressured by the investment community, reviewed its international strategy and attempted to ‘reset’ its relations with capital markets to re-emphasize shareholder value and returns. The research teases out the manner in which legitimacy with capital markets underpins the extent, pace and form of global retail expansion, leading to significant implications for workers, consumers and wider stakeholders across spatially dispersed host markets.

Suggested Citation

  • Steve Wood & Neil Wrigley & Neil M. Coe, 2017. "Capital discipline and financial market relations in retail globalization: insights from the case of Tesco plc," Journal of Economic Geography, Oxford University Press, vol. 17(1), pages 31-57.
    • Handle: RePEc:oup:jecgeo:v:17:y:2017:i:1:p:31-57.
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    File URL: http://hdl.handle.net/10.1093/jeg/lbv045
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    Citations

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    Cited by:

    1. Burt, Steve & Coe, Neil M. & Davies, Keri, 2019. "A tactical retreat? Conceptualising the dynamics of European grocery retail divestment from East Asia," International Business Review, Elsevier, vol. 28(1), pages 177-189.
    2. Harald Bathelt & John A Cantwell & Ram Mudambi, 2018. "Overcoming frictions in transnational knowledge flows: challenges of connecting, sense-making and integrating," Journal of Economic Geography, Oxford University Press, vol. 18(5), pages 1001-1022.
    3. Neil M Coe & Yong-Sook Lee & Steve Wood, 2017. "Conceptualising contemporary retail divestment: Tesco's departure from South Korea," Environment and Planning A, , vol. 49(12), pages 2739-2761, December.

    More about this item

    Keywords

    Global retail; capital discipline; globalization; retailing; finance;
    All these keywords.

    JEL classification:

    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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