Multinational enterprises (MNEs) compete in a fierce global arena. One of the most critical aspects related to their performance, is among others, the speed of internationalisation the adopt, that is how rapidly MNEs expand their foreign operations. Although high speed of internationalisation is important for MNEs in order to leverage first mover advantages and quickly deploy their unique firm-specific capabilities, at the same time the managerial resources needed to execute such a fast-paced internationalization strategy are limited, and to a certain extent, subject to regional availability. As such, firms that grow too rapidly in one period may not only grow more slowly in the subsequent period but may also need to divest some of their operations.
The study developed by Dr. Batsakis and his coauthors (Prof. Alex Mohr from WU Vienna and Dr. Zita Stone from the University of Kent) argues that the likelihood of divestment of MNEs’ international operations increases with the speed of firms’ prior international expansion. Given that MNEs are likely to face constraints in terms of quickly deploying managerial resources to new international operations, the study argues that two important factors, namely international experience and regional concentration, can act as “shock absorbers”, thus mitigating the negative effects of the speed of firms’ prior international expansion on the level of foreign divestment.
Drawing on regional strategy theory and the theory of the growth of the firm (Edith Penrose), the aforementioned arguments are tested using two-stage least squares (2SLS) estimation on panel data that capture the international expansion and divestment of retailers over the period 2003–2012.
The article has been published in the Journal of International Business Studies.
Dr. Georgios Batsakis is an Assistant Professor of International Business. His research focuses on internationalisation processes and foreign market entry strategies of multinational enterprises. His teaching lies in the areas of international business, strategic management and entrepreneurship. Dr. Batsakis has published in leading international business and general management academic journals, such as the Journal of International Business Studies, Journal of World Business, British Journal of Management, Management International Review, International Business Review, International Marketing Review, Journal of Business Research, among others.