Multilatinas’ foreign divestment and host country institutional uncertainty: is there a best entry strategy?
ISSN: 0955-534X
Article publication date: 3 October 2023
Issue publication date: 23 January 2024
Abstract
Purpose
This paper aims to investigate the divestment behavior of emerging market multinationals from Latin America – multilatinas – by examining how their foreign market entry decision impacts the likelihood of subsidiary divestment.
Design/methodology/approach
The hypotheses are tested using Cox’s proportional hazard rate model in a longitudinal database of Brazilian multinational companies established in 43 countries.
Findings
Results indicate that these subsidiaries can thrive in environments that bear similarities to their home country, being less likely to divest in institutionally weak countries. Contrary to developed country multinationals, these firms benefit from foreign entry decisions that entail handling partnerships abroad; thus, wholly-owned greenfield (WOGF) investments have a higher likelihood of being divested.
Originality/value
To the best of the authors’ knowledge, this paper is the first to analyze foreign divestment from multilatinas, accounting for how entry mode strategy and host country institutions may impact these firms’ de-internationalization.
Keywords
Acknowledgements
This study was funded by Conselho Nacional de Desenvolvimento Científico e Tecnológico (306443/2022-8 and 309410/2021-5) and Coordenação de Aperfeiçoamento de Pessoal de Nível Superior (88887.486047/2020-00).
Since acceptance of this article, the following author has updated their affiliation: Luíza Neves Marques da Fonseca is at the Tecnológico de Monterrey, Mexico City, Mexico.
Citation
da Fonseca, L.N.M., da Rocha, A. and Ferreira, J.B. (2024), "Multilatinas’ foreign divestment and host country institutional uncertainty: is there a best entry strategy?", European Business Review, Vol. 36 No. 1, pp. 71-88. https://doi.org/10.1108/EBR-05-2023-0150
Publisher
:Emerald Publishing Limited
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