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International relations and foreign divestment of multinational enterprises

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  • Wu, Sihong
  • Fan, Di
  • Su, Yiyi

Abstract

Due to the growing complexity of international relations over the past decade, multinational enterprises (MNEs) have embarked on a new era characterized by novel challenges and opportunities. The reversal trend of internationalization has evoked a fast-growing research interest in MNEs’ foreign divestment decisions. However, scant research has integrated the changing international relations in order to examine their propensity to divest. Drawing on insights from the international relations perspective, this study explores the impact of host-country national sentiment (characterized by the prioritization of national interests) and home-host country diplomatic relations (centered on fostering bilateral interests) on foreign divestment. Our findings show that MNEs’ propensity to divest increases when host-country national sentiment becomes stronger but decreases when home-host countries have strengthened diplomatic engagement. These relationships are moderated by MNEs’ ownership strategy. Overall, this study enriches the literature and offers new insights into de-globalization and the research of unilateral and bilateral relations in international business.

Suggested Citation

  • Wu, Sihong & Fan, Di & Su, Yiyi, 2025. "International relations and foreign divestment of multinational enterprises," International Business Review, Elsevier, vol. 34(5).
    • Handle: RePEc:eee:iburev:v:34:y:2025:i:5:s0969593125000976
    DOI: 10.1016/j.ibusrev.2025.102484
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