Explaining the performance of divested overseas subsidiaries

We examine the post-divestment performance of subsidiaries that have been divested by their foreign owners and have subsequently been acquired by domestic owners. Drawing on Hymer’s classic explanation of firm internationalization and on the resource-based view dimension of internalization theory, we suggest that the differences in terms of the degree to which FSAs are independent from the linkages to the parent firm will be reflected in the variation in the performance effect of a foreign-to-domestic sale of the business. We argue that the negative performance effect of a foreign-to-domestic sale of a subsidiary is lower (1) for older subsidiaries, (2) for subsidiaries oriented toward the domestic, and (3) when the foreign parent firm is located outside the subsidiary’s geographic region. By using propensity score matching and difference-in-differences estimations, we examine the proposed effects and provide novel insights on the performance implications of the foreign-to-local ownership changes.     

Asset divestment as a response to media attacks in stigmatized industries

In stigmatized industries characterized by social contestation, hostile audiences, and distancing between industry insiders and outsiders, firms facing media attacks follow different strategies from firms in uncontested industries. Because firms avoid publicizing their tainted‐sector membership, when threatened, they can respond by divesting assets from that industry. Our analyses of the arms industry demonstrate that media attacks on the focal firm and its peers both increase the likelihood of divestment for the focal firm. Specifically, attacks on the focal firm are the most consequential, followed by attacks on peers in the same industry subcategory, and by attacks on peers in different subcategories. These findings shed new light on divestment as a response to media attacks in stigmatized industries and lead us to rethink impression management theory. Copyright © 2014 John Wiley & Sons, Ltd.     

The impact of modes of entry and resource fit on modes of exit by multibusiness firms

This study examines the choices of modes of entry and exit in the process of new business exploration. We find that exit mode choices are determined by a different set of factors from those that are important for the entry mode decision and the exit decision per se. Our study indicates that when the resource profiles of a parent firm and the business unit are more dissimilar, and there has been less development of firm‐specific idiosyncratic assets, firms are more likely to sell businesses than dissolve them. Further, the study reports a strong relationship between the mode of exit from a line of business (sell‐off vs. dissolution) and the original mode of entry (acquisition versus internal development). Copyright © 1999 John Wiley & Sons, Ltd.     

An Integrated Perspective on Foreign Ethical Divestment

Much of the existing literature on foreign ethical divestment has been developed in isolation and scattered across multiple disciplines. This article reviews the existing literature on foreign ethical divestment to extract emerging themes and outline new directions for future research. Our review uncovered that foreign ethical divestment decisions can be attributed to macro‐, firm‐, and individual‐level factors. We therefore develop an integrated model to link the dynamics of ethical foreign divestment. The study identified a number of unanswered questions and implications for future research. © 2016 Wiley Periodicals, Inc.     

Taking stock of foreign divestment: Insights and recommendations from three decades of contemporary literature

Despite garnering an increasing amount of scholarly attention in the past three decades, the literature on foreign divestment is characterised by inconsistent theoretical arguments and mixed findings. In the present paper we review 53 articles on foreign divestment using the content analysis technique. Our aim is to compare and consolidate the main findings of the 53 articles, and provide suggestions for future research. The review suggests that there are several overlapping arguments provided by different theoretical frameworks. We also observed a great degree of discrepancy in the empirical design, particularly concerning the operationalisation of variables, sample sizes, and sample location. Moreover, we identified that there is a dearth of literature on exit modes, exit barriers, and post-divestment strategies. We conclude by providing recommendations and proposing a framework for future research.     

Foreign Investment,Divestment and Relocation by Japanese Electronics Firms in East Asia*

Although foreign divestment and international relocation by multinational firms carry important economic implications for the industrialization of East Asian countries, there has been little empirical research on these issues. In this paper we analyze the magnitude and pattern of foreign divestment and relocation by Japanese electronics firms in nine East Asian countries during 1995–2003. The average annual divestment rate of electronics manufacturing affiliates is 3 percent, but divestment patterns diverge strongly across countries. Divestments are much more frequent in higher labor cost countries and in approximately one‐third of cases are accompanied by relocations to lower wage countries, particularly to China. Evidence is found for rivalry between China and ASEAN countries in attracting foreign direct investment, but the growing attractiveness of China has not been accompanied by a reduction in employment in Japanese affiliates in ASEAN countries (with the exception of Singapore). Divestments and relocations are related to Japanese firms’ strategy to reconfigure their Asian production networks in response to changing competitiveness, regional integration, and changes in local investment environments.     

Liberty in Paris: International retailing, 1889–1932

This article considers the international retailing operation of Liberty of London in Paris between 1889 and 1932. Using data from the company archive, the article challenges assumptions regarding the nature and role of early retail activity in the internationalisation process. Drawing on theoretical frameworks from the marketing and management literature, the article considers Liberty’s Paris operation from entry stage activity in the late 1880s through to the divestment process in the early 1930s. Detailed consideration of this firm shows that the specialist retailer with distinct firm specific assets developed in the domestic market was operating internationally in the late nineteenth century.     

Too Small or Too Big to Survive: Foreign Direct Investment and Divestment in Breweries

The paper focuses on both the economic and noneconomic multilateral relationships inside and outside the TNCs’ own business networks in the processes of the firms’ internalization on the example of foreign direct investment and divestment in breweries in the UK and Poland. The mode of TNCs’ entry in breweries in the mature economy of the UK and transformation economy in Poland is less country specific and more associated with the international environment of network relationships. The paper presents both structures of the international networks connections as well as the ways they have been created. The system analysis is used.     

AGENCY CONFLICT AND CORPORATE STRATEGY: THE EFFECT OF DIVESTMENT ON CORPORATE VALUE

Among the various stakeholders of a firm, senior managers are the most likely targets for private and public political pressures. Other stakeholder groups are less visible and may be perceived as less influential in corporate strategy formulation and implementation. In some situations, consequently, senior executives may adopt corporate strategies in response to political pressures even if these strategies may be costly to shareholders. In this study, a special case is examined: the effect of divestment of South African business units on firm value. Using data from 1984 through 1990, we examine the impact that announcements of divestments have upon the stock return behavior of publicly traded firms. Our results indicate that significant and negative excess returns accrue to shares of companies announcing divestments of South African operations. These results are supportive of the premise that noneconomic pressures may influence managerial strategies rather than value-enhancement goals. © 1997 by John Wiley & Sons, Ltd.