Divestment and international business strategy

This paper deals with divestment, i.e., the closure or sell-off of units in foreign locations, or conversely units owned by foreign firms. Such actions are discussed from the perspective of the firms making such decisions, and divestment assessments are looked at through the lens of international business strategy. Based on the integration-responsiveness framework of international business strategy, it is argued that the divestment propensities 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-domestic 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.