Explaining the performance of divested overseas subsidiaries



Mohr, Alex, Konara, Palitha and Ganotakis, P ORCID: 0000-0001-7896-799X
(2020) Explaining the performance of divested overseas subsidiaries. International Business Review, 29 (1).

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Abstract

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.

Item Type: Article
Uncontrolled Keywords: Foreign divestment, Post-divestment performance, Internalization theory, Subsidiary-level FSAs, Foreign sell-offs, Subsidiary performance
Depositing User: Symplectic Admin
Date Deposited: 17 Oct 2019 08:38
Last Modified: 17 Apr 2021 00:10
DOI: 10.1016/j.ibusrev.2019.101602
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URI: https://livrepository.liverpool.ac.uk/id/eprint/3058298

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