Foreign Subsidiary and Parents' Roles During Strategic Investment and Divestment Decisions

Ghertman, Michel

doi:10.1057/palgrave.jibs.8490374

Cited by 37 publications

(42 citation statements)

References 19 publications

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“…In the finance literature, the acquisition of companies followed by its reorganization and subsequent sell-off has been clearly identified as a means of making a profit (Kaplan and Weisbach 1989). In the context of international business, Tsetekos and Gombola (1992) and Ghertman (1988) noted that divestment of foreign subsidiaries does not necessarily indicate problems in the subsidiary, nor in the parent company. Rather, it may be due to strategic reorientation of the parent company and to the perception that the subsidiary no longer fits with the parent.…”

Section: Resultsmentioning

confidence: 99%

Closure and divestiture by foreign entrants: the impact of entry and post-entry strategies

2000

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We analyze the longevity of foreign entrants explicitly considering two possible ways of exit: firm closure and capital divestiture. We find that entry and post-entry strategies affect the longevity of firms and of foreign equity holdings, but in different manners. While the ownership arrangements and organizational structure affect the likelihood of divestment, they exert no significant effect upon closure. The entry mode exerts opposite effects on the two modes of exit, greenfield entrants being more likely to shutdown, but less likely to be divested. Only human capital affects closure and divestment in the same manner. Firms with large endowments of human capital are less likely to exit, irrespective of the exit mode considered.

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Section: Resultsmentioning

confidence: 99%

Closure and divestiture by foreign entrants: the impact of entry and post-entry strategies

2000

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“…3 Although the activity of divesting overseas operations can itself be expected to require managerial resources (Cairns, Doherty, Alexander, & Quinn, 2008), research into the process of divesting overseas operations in general (e.g., Ghertman, 1988) and retail outlets in particular (e.g., Cairns, Doherty, Alexander, & Quinn, 2008) suggests that the type of resources needed to manage divestments differs from the managerial resources needed to plan, establish, and coordinate a firm's (other) overseas operations. This research indicates that divestments require higher levels of technical (e.g., accountants) or external staff (e.g., lawyers, consultants) and fewer of the internally experienced managerial resources that are central to the Penrosean argument.…”

mentioning

confidence: 99%

Explaining the effect of rapid internationalization on horizontal foreign divestment in the retail sector: An extended Penrosean perspective

2018

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We adopt a Penrosean perspective to study the effect of rapid international expansion on the subsequent divestment of international operations. We draw on regional strategy theory and differentiate Penrosean managerial resources by their geographical fungibility to argue that the effect of rapid international expansion on the divestment of international operations varies with the regional patterns of firms' international expansion and international experience. We test our hypotheses using two-stage least squares (2SLS) estimation on data that capture the international expansion and divestment of retailers over the period [2003][2004][2005][2006][2007][2008][2009][2010][2011][2012]. Journal of International Business Studies (2018).

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“…Expansion in various countries with potentially divergent macroeconomic developments, under the pattern of multiple simultaneous OFDIs, can provide greater flexibility, allowing more opportunities with low correlation provided initially by several multiple projects (Tang and Tikoo, 1999;Lee & Makhija, 2009 Wind & Douglas, 1981;Ghertman, 1988;Butler & Joaquin, 1998) found that the returns of MNEs influence decisions of later foreign investment. As such, scholars should go beyond the direct nexus between the pattern of OFDI and firm performance and focus on the exogenous influence that may shape how, and in what ways, firms benefit from the specific pattern of OFDI.…”

Section: The Performance Effect Of Ofdi Patternsmentioning

confidence: 99%

The OFDI patterns and firm performance of Chinese firms: The moderating effects of multinationality strategy and external factors

Clegg

Lin

Voss

et al. 2016

International Business Review

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The purpose of this paper is to examine how multinationality strategy, home political influence, and host-country risk explain the performance consequences of OFDI patterns of firms in the most important emerging economy, China. Two main patterns of OFDI ('born global' natured multiple simultaneous and IP-natured gradually growing) have been dominant in China during its first OFDI as a latecomer. In contrast to the conventional IP argument, we hypothesize that the multiple simultaneous pattern of a born-global nature leads to better performance. We also hypothesize that firm multinationality strategy and home political influence play greater roles in enhancing the performance effect of the multiple simultaneous pattern than another pattern, i.e. IP-natured gradually growing pattern. Using panel data of 4,619 observations from 261 Chinese publicly listed firms from 1991-2011, we find a superior performance effect for the multiple simultaneous pattern. Further, we find a greater moderating effect of firm multinationality strategy and home political influence affecting the OFDI and performance relationship undertaken by the multiple simultaneous pattern than by the gradually growing pattern. Our study extends understanding of OFDI patterns in emerging economies and suggests that the analysis of performance consequences should focus on external and firm factors that may facilitate the performance effect.

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Foreign Subsidiary and Parents' Roles During Strategic Investment and Divestment Decisions

Cited by 37 publications

References 19 publications

Closure and divestiture by foreign entrants: the impact of entry and post-entry strategies

Closure and divestiture by foreign entrants: the impact of entry and post-entry strategies

Explaining the effect of rapid internationalization on horizontal foreign divestment in the retail sector: An extended Penrosean perspective

The OFDI patterns and firm performance of Chinese firms: The moderating effects of multinationality strategy and external factors

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