Firm-specific resources and foreign divestments via selloffs: Value is in the eye of the beholder

In this paper, by using a large sample of foreign subsidiaries in Spain, we examine what explains their divestment via sell-offs. By integrating resource-based theory with foreign divestment literature, we examine the role that different subsidiary level resources and innovative capabilities play on its likelihood of being divested. We also argue and empirically show that the most influential subsidiary characteristics that determine divestment differ depending on whether the acquiring firm is a host-country firm or a foreign firm. Our results suggest that foreign subsidiaries are less likely to be sold off when they are characterized by high levels of product innovation performance, human capital or have introduced organizational innovations. Moreover, subsidiaries with export-market oriented capabilities were more likely to be divested to other foreign buyers whereas subsidiaries with domestic-market oriented capabilities were more likely to be divested to domestic buyers.