divestment and international business strategy.pdf
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1、Journal of Economic Geography 5 (2005) pp. 235251 Advance Access originally published online on 14 February 2005doi:10.1093/jnlecg/lbh041 Divestment and international business strategy Gabriel R.G. Benito* Abstract Thispaperdealswithdivestment,i.e.,theclosureorsell-offofunitsinforeign locations, or
2、conversely units owned by foreign fi rms. Such actions are discussed from the perspective of the fi rms making such decisions, and divestment assessments are looked at through the lens of international business strategy. Based on the integration-responsiveness framework of internationalbusinessstrat
3、egy,itisarguedthatthedivestmentpropensities 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-domest
4、ic 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. Keywords: Divestment, multinational company, international strategy JEL classification: F21, F23, M21, L10
5、Date submitted: 5 December 2003Date accepted: 27 May 2004 1. Introduction An impressive number of studies have been conducted since the 1960s regarding the internationalization of fi rms, especially with a focus on multinational corporations (MNCs), i.e., fi rms that own and operate units in foreign
6、 locations (Dunning, 2001). The interest in MNCs is understandable given the economic clout of such corporations, which,asputbyPeterDicken(2003,p.198)hascometoberegardedastheprimaryshaper of the contemporary global economy. The term globalization is often used to describe a process of increasing int
7、egration of national and regional economies (Whitley, 2001), whichworkstowardsaworldwideconvergenceofinstitutions,norms,andbehaviors.The actions of multinational corporations promote increased economic interdependence among nations and regions thereby making them key actors in the globalization proc
8、ess (Rugman and Verbeke, 2004, p.3), although the idea that their increased signifi cance necessarily leads to convergence between nations, consumer preferences, or even business behaviors is contested (see e.g., Gertler, 2001; Morgan et al., 2001). It has been noted that MNCs vary considerably, par
9、tly refl ecting the institutional and contextualparticularitiesoftheirrespectivehomebases,butpartlyalsoasaresultoftheir differentinternationalizationstrategies(Morganetal.,2001).Suchvariation *Department of International Economics and Management, Copenhagen Business School, Howitz vej 60, DK-2000 Fr
10、ederiksberg, Denmark; and Norwegian School of Management BI, N-1300 Sandvika, Norway. email #The Author (2005). Published by Oxford University Press. All rights reserved. For Permissions, please email: journals.permissionsoupjournals.org notwithstanding, Dicken (2003, p.198) accurately summarizes th
11、e general characteristics of MNCs as companies (i) that coordinate and control various stages of value-added activities within and between countries, (ii) are able to take advantage of national differences in resources and policies, and (iii) have considerable potential for location fl exibility, i.
12、e., the ability to switch and re-switch their resources and operations between locations at an international, or even global, scale. It is nonetheless clear that the two fi rst characteristics have received most of the attention so far, with few studies actually looking at the relocation and divestm
13、ent aspects of MNC activity. In spite of data indicating that divestments are quite common,1as pointed out by Benito and Welch (1997, p.8): . most of the literature on the international operations of fi rms has focused on the growthor positive developmentof international business operations. It is s
14、uggestive that terms such as divestment, divestiture, closure, and exit do not even appear as entries in the otherwise comprehensive index included in Rugman and Brewers authoritative anthology on the state-of-the-art ininternational businessresearch (Rugman andBrewer, 2001). Likewise, arecentreview
15、ofresearchonglobalstrategydoesnotexplicitlytouchonthesubjectatall (ChngandPangarkar,2000).Studiesondivestment(e.g.,Shapiro,1983;Li,1995;Benito, 1997a) closure of foreign units (e.g., Mata and Portugal, 2000), relocation (Pennings and Sleuwaegen, 2000), and market exit (Welch and Wiedersheim-Paul, 19
16、80; Matthyssens and Pauwels, 2000; Wrigley and Currah, 2003) are still relatively scarce, despite the apparent signifi cance that continuing MNC operations have for a wide array of actorsranging from national governments to individual workersand the repeated calls for more knowledge about the magnit
17、ude of foreign divestment, the drivers of divestment, and the ensuing effects (Boddewyn, 1979; Caves, 1995; Benito, 1997b; Burt et al., 2003). Thisarticlelooksatdivestmentthroughthelensofinternationalbusinessstrategy:that is, it deals with the closure or sell-off of units in foreign locations, or co
18、nversely units owned by foreign fi rms, and will examine such actions from the perspective of the fi rms making such decisions. Specifi cally, it draws on contemporary analysis of international businessstrategytoprobeintowhyandwhenforeigndivestmentislikelytobeacourseof action taken by MNCs. The rema
19、inder ofthepaperproceeds asfollows.The nextsectiongives abriefoverview of the divestment literature based on economics and business perspectives. The basics of internationalbusinessstrategyarethensketchedout,withanemphasisonthecorefactors in the so-called integration-responsiveness model, which has
20、became a standard framework for analysis of fi rms international strategies both in economic geography (Dicken, 1994, 2003) and in the business fi eld (Bartlett and Ghoshal, 1989).2The central part of the paper presents an analysis of how the core factors in the integration- responsiveness framework
21、 may lead to relocation, divestment, and market exits as the effects of corporate re-structuring and adjustment processes, and not just as failures in foreign markets. Some fi nal remarks conclude the paper. 1Barkemaetal.(1996)reportthatof225FDIsmadebylargeDutchMNCsintheperiod1966to1988onlyhalf were
22、stillinexistencein1988.Benitos(1997a)studyofNorwegianMNCsshowsthatmorethanhalfoftheir FDIsin1982weredivestedwithinaperiodoftenyears.MataandPortugal(2000)reportyearlyexitratesof more than 10% for a sample of foreign subsidiaries in Portugal. 2Important contributions include Doz (1986), Porter (1986),
23、 Bartlett and Ghoshal (1989, 1993), Yip (1992), Prahalad and Doz (1997), and Harzing (2000). 236?Benito 2. Perspectives on divestment Divestment has been studied from a variety of perspectives. The wide ranging and multi- layered characters of the phenomenon imply that appropriate levels of analysis
24、 range from nations and regions, via industries, to specifi c fi rms, and even individuals. Also, it is one of those phenomena whose signifi cance and complexity both attract and request a diversityofapproaches:oneshouldnotpresumethattheinsightsprovidedbygeography, economics, and business research c
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