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Beyond Capital Access: Managing Institutional Risk in Sovereign Wealth Fund Investment
Aziz, Youanna
Aziz, Youanna
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Abstract
The global investment environment is fragmenting along geopolitical lines, forcing multinational enterprises to make high-stakes financing decisions under increasing institutional scrutiny. This paper examines the strategic choice facing firms in capital-intensive sectors when accepting minority equity investment from Gulf sovereign wealth funds. The core decision is binary: accept sovereign capital under conventional governance structures to maximize financial efficiency, or adopt governance-conditioned acceptance to secure regulatory approval and institutional legitimacy. This paper argues that firms must pursue governance-conditioned acceptance. Drawing on Institutional Theory as the primary analytical framework, supported by State Capitalism, the analysis demonstrates that ownership structure alone no longer determines political risk, and that legitimacy has become the binding constraint on investment approval. The key conclusion is that institutional perception, not financial attractiveness, ultimately determines whether sovereign capital can be converted into strategic advantage, and firms that fail to structure governance accordingly risk turning financial opportunity into institutional exposure.
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2026
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Keywords
Sovereign Wealth Funds, Institutional risk, Institutional Theory
Citation
Aziz, Youanna. "Beyond Capital Access: Managing Institutional Risk in Sovereign Wealth Fund Investment". BA in International Business Capstone, John Cabot University, Rome, Italy. 2026.
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Attribution-NonCommercial-NoDerivatives 4.0 International