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To exist or to exit? Dynamic managerial capabilities and global connectedness in foreign divestment

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posted on 2023-06-10, 06:14 authored by Jorma Larimo, Ha NguyenHa Nguyen
International business scholars have recognized a crucial role of top managers at headquarters in strategic decisions and organizational performance. However, the managerial roles in making foreign divestment decisions are neglected. We extend the dynamic managerial capabilities (DMC) view in foreign divestment literature and explore influences of managerial human capital, managerial social capital, and managerial cognition on foreign divestment probability. Elaborating further on the managerial network perspective, we examine a moderating effect of global connectedness differences on the main hypotheses. Based on a sample of 657 foreign investment cases made by 241 Finnish MNEs in 36 host countries during 2005–2015, our results confirm the significantly negative effects of dynamic managerial human and social capital on the divestment rate. Notably, managerial cognition measured at cultural cluster level is found to significantly decrease divestment probability. We also provide empirical evidence for the moderating effects of global connectedness differences on the main hypotheses. On the basis of our results, we encourage future researchers to focus on managerial involvement in foreign divestment research and urge MNEs to consider their dynamic managerial capabilities.

History

Publication status

  • Published

Publisher

Palgrave Macmillan

Page range

251-272

Pages

21.0

Book title

Megatrends in International Business: Examining the Influence of Trends on Doing Business Internationally

ISBN

9783030955267

Department affiliated with

  • Strategy and Marketing Publications

Full text available

  • No

Peer reviewed?

  • Yes

Editors

Kuivalainen Olli, Sinkovics Rudolf, Spiros Batas

Legacy Posted Date

2023-02-15

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