Divestment of foreign production operations
This study investigates some determinants fo the divestment of foreign manufacturing operations by Norwegian companies. To date, very few studies have taken a closer look at what might influence whether foreign subsidiaries are divested or not. Although foreign direct investment - in principle - represent long-term commitments to foreign manufacturing operations, divestments are in fact quite common. This study shows that more than half of a sample of foreig subsidiaries woned by Norwegian companies in 1982 wee divested within a period of ten years. The empirical findings indicate that foreign divestment is inversely related to economic growth in the host country, and that the propensity to divest is significantly higher for subsidiaries that had been acquired than for greenfield establishments. Also, related (horizontal) subsidiaries are less likely to be divested than unrelated (non-horizontal)subsidiaries.
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Volume (Year): 29 (1997)
Issue (Month): 10 ()
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References listed on IDEAS
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- Kravis, Irving B. & Lipsey, Robert E., 1982.
"The location of overseas production and production for export by U.S. multinational firms,"
Journal of International Economics,
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- Randall Morck & Andrei Shleifer & Robert W. Vishny, 1989.
"Do Managerial Objectives Drive Bad Acquisitions?,"
NBER Working Papers
3000, National Bureau of Economic Research, Inc.
- Gabriel R G Benito & Geir Gripsrud, 1992. "The Expansion of Foreign Direct Investments: Discrete Rational Location Choices or a Cultural Learning Process?," Journal of International Business Studies, Palgrave Macmillan, vol. 23(3), pages 461-476, September.
- Pennings, J.M. & Barkema, H.G. & Douma, S.W., 1994. "Organizational learning and diversification," Other publications TiSEM 2cabb122-340f-4729-afb3-9, Tilburg University, School of Economics and Management.
- Veugelers, Reinhilde, 1991. "Locational Determinants and Ranking of Host Countries: An Empirical Assessment," Kyklos, Wiley Blackwell, vol. 44(3), pages 363-82.
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