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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.

Suggested Citation

  • Gabriel R. G. Benito, 2005. "Divestment and international business strategy," Journal of Economic Geography, Oxford University Press, vol. 5(2), pages 235-251, April.
  • Handle: RePEc:oup:jecgeo:v:5:y:2005:i:2:p:235-251
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    File URL: http://hdl.handle.net/10.1093/jnlecg/lbh041
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    References listed on IDEAS

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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. Gulamhussen, Mohamed Azzim, 2007. "Choice of scale by banks in financial centers," International Business Review, Elsevier, vol. 16(4), pages 507-525, August.
    2. repec:bla:stratm:v:38:y:2017:i:7:p:1478-1498 is not listed on IDEAS
    3. 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.
    4. 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.
    5. 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.
    6. Laura Resmini & Giuseppe Vittucci, 2016. "Home country bias in divestment decisions of multinational corporations in the EU," ERSA conference papers ersa16p220, European Regional Science Association.
    7. repec:pal:jintbs:v:48:y:2017:i:8:d:10.1057_s41267-017-0110-z is not listed on IDEAS
    8. 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.
    9. repec:eee:iburev:v:27:y:2018:i:1:p:102-112 is not listed on IDEAS
    10. repec:bla:presci:v:96:y:2017:i:2:p:299-323 is not listed on IDEAS
    11. Engel, Dirk & Procher, Vivien & Schmidt, Christoph M., 2013. "Does firm heterogeneity affect foreign market entry and exit symmetrically? Empirical evidence for French firms," Journal of Economic Behavior & Organization, Elsevier, vol. 85(C), pages 35-47.
    12. Dirk Engel & Christoph M. Schmidt & Vivien Procher, 2010. "The Asymmetries of a Small World: Entry Into and Withdrawal From International Markets by French Firms," Ruhr Economic Papers 0192, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    13. Weifeng Zhai & Shiling Sun & Guangxing Zhang, 2016. "Reshoring of American manufacturing companies from China," Operations Management Research, Springer, vol. 9(3), pages 62-74, December.
    14. Song, Sangcheol, 2015. "Exchange rate challenges, flexible intra-firm adjustments, and subsidiary longevity," Journal of World Business, Elsevier, vol. 50(1), pages 36-45.
    15. 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.
    16. Brown, T. & Panibratov, A., 2016. "Foreign divestment decisions: A theoretical framework," Working Papers 6450, Graduate School of Management, St. Petersburg State University.
    17. 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.
    18. repec:zbw:rwirep:0192 is not listed on IDEAS
    19. repec:spr:manint:v:53:y:2013:i:4:d:10.1007_s11575-012-0157-9 is not listed on IDEAS
    20. repec:spr:manint:v:49:y:2009:i:2:d:10.1007_s11575-008-0133-6 is not listed on IDEAS
    21. 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.
    22. repec:spr:manint:v:54:y:2014:i:1:d:10.1007_s11575-013-0198-8 is not listed on IDEAS
    23. 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).
    24. Engel, Dirk & Procher, Vivien & Schmidt, Christoph M., 2010. "The Asymmetries of a Small World: Entry Into and Withdrawal From International Markets by French Firms," Ruhr Economic Papers 192, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    25. repec:spr:manint:v:57:y:2017:i:4:d:10.1007_s11575-017-0317-z is not listed on IDEAS

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