Explaining the performance of divested overseas subsidiaries

Mohr, Alex, Konara, Palitha and Ganotakis, Panagiotis (2019) Explaining the performance of divested overseas subsidiaries. International Business Review. ISSN 0969-5931 (Accepted)

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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
Schools and Departments: School of Business, Management and Economics > Strategy and Marketing
Depositing User: Palitha Konara
Date Deposited: 26 Sep 2019 09:43
Last Modified: 04 Nov 2019 14:09
URI: http://sro.sussex.ac.uk/id/eprint/86427

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