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Divestment and international business strategy

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  • Gabriel R. G. Benito

Abstract

This paper deals with divestment, i.e., the closure or sell-off of units in foreign locations, or conversely units owned by foreign firms. Such actions are discussed from the perspective of the firms making such decisions, and divestment assessments are looked at through the lens of international business strategy. Based on the integration-responsiveness framework of international business strategy, it is argued that the divestment propensities of foreign subsidiaries depend on the type of strategy pursued by the corporation. Subsidiaries of transnational corporations are in general likely to display the highest divestment rates. Whereas subsidiaries forming part of international and multi-domestic strategies may have the lowest divestment likelihood initially, subsidiaries established as part of a global strategy are expected to be the least probable to be divested in the longer run. Copyright 2005, Oxford University Press.

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Bibliographic Info

Article provided by Oxford University Press in its journal Journal of Economic Geography.

Volume (Year): 5 (2005)
Issue (Month): 2 (April)
Pages: 235-251

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Handle: RePEc:oup:jecgeo:v:5:y:2005:i:2:p:235-251

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  1. Eiji Yamamura & Tetsushi Sonobe & Keijiro Otsuka, 2003. "Human capital, cluster formation, and international relocation: the case of the garment industry in Japan, 1968--98," Journal of Economic Geography, Oxford University Press, vol. 3(1), pages 37-56, January.
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Cited by:
  1. Sangcheol Song, 2014. "Entry mode irreversibility, host market uncertainty, and foreign subsidiary exits," Asia Pacific Journal of Management, Springer, vol. 31(2), pages 455-471, June.
  2. Boehe, Dirk Michael, 2011. "Exploiting the liability of foreignness: Why do service firms exploit foreign affiliate networks at home?," Journal of International Management, Elsevier, vol. 17(1), pages 15-29, March.
  3. Benito, Gabriel & Narula, Rajneesh, 2007. "States and Firms on the Periphery: The Challenges of a Globalising World," MERIT Working Papers 004, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  4. Haugland, Sven A., 2010. "The integration-responsiveness framework and subsidiary management: A commentary," Journal of Business Research, Elsevier, vol. 63(1), pages 94-96, January.
  5. Tomassen, Sverre & Benito, Gabriel R.G., 2009. "The costs of governance in international companies," International Business Review, Elsevier, vol. 18(3), pages 292-304, June.
  6. Dörrenbächer, Christoph & Gammelgaard, Jens, 2010. "Multinational corporations, inter-organizational networks and subsidiary charter removals," Journal of World Business, Elsevier, vol. 45(3), pages 206-216, July.
  7. Chung, Chris Changwha & Lee, Seung-Hyun & Beamish, Paul W. & Southam, Colette & Nam, Daeil (Dale), 2013. "Pitting real options theory against risk diversification theory: International diversification and joint ownership control in economic crisis," Journal of World Business, Elsevier, vol. 48(1), pages 122-136.
  8. Gulamhussen, Mohamed Azzim, 2007. "Choice of scale by banks in financial centers," International Business Review, Elsevier, vol. 16(4), pages 507-525, August.
  9. Hutzschenreuter, Thomas & Horstkotte, Julian, 2013. "Performance effects of international expansion processes: The moderating role of top management team experiences," International Business Review, Elsevier, vol. 22(1), pages 259-277.

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