Brunel Research: Explaining the effect of rapid internationalization on horizontal foreign divestment in the retail sector

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.

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Figure: The moderating role of intra-regional international experience on the relationship between intra-regional internationalization speed and intra-regional foreign divestment. (Image source)

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.

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Developmental programme for doctoral students at Brunel Business School

Message from Dr. Dorothy Yen, Director of the Doctoral programme at Brunel Business School

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This year’s Brunel Business School PGR Student Development Programme has just finished.

 

Six PhD students participated in this programme as mentees. They each volunteered 1 hour per week (10 hours in total), during term 1, to shadow and assist their mentors in the delivery of final year project seminars. This experience allowed them to witness how seminars are constructed, and to engage with final year undergraduate students during the seminars.

 

From the feedback that we have received from both staff and PhD students, this programme was a great success, and we will endeavour to run it again as a regular training opportunity for our PGR students.

 

This is a sample of what our PhD students felt that gained from this experience, and how it will help them prepare them for their future higher education career:

The opportunity from participating in this BBS PGR Developmental programme has provide a valuable experience…This experience has enhanced my confidence in the classroom environment, and my ability to utilise the knowledge and research skills that I have gained throughout my PhD study. I have acknowledged the need to develop my communication skills further in order to explain or elaborate the idea clearly, in the sense that it should not only includes theoretical concepts but to combine with practicality…” Theenida Buntornwon.

What I learnt from this experience will help me in my future academic career on few levels. First, after I built a better understanding on assessing the student capabilities, it will help me to design and prepare the most appropriate teaching material based on the student needs and link it to examples from our daily life. Second, it will help me to build a good and professional relation with the students which increase their productivity and the overall outcome from the course. Third, this experience has improved my time management skills for the class and helped me to have better ideas on how to allocate time for each part of the lecture. Finally, this experience will make it much easier for in term of solving unexpected issues in the class.” Ruaa Hasan.

 

Thank you to the colleagues that have kindly offered to act as mentors for PhD students and allowed PhD students to shadow them when delivering final year projects, this year. Namely, Drs. Bidit Dey, Raffaella Valsecchi, Marios Samdanis, Nikolaos Antypas, Monomita Nandy, Sharifah Alwi, and Sankar Sivarajah.

 

More information about our PhD programme is available here.

BBS PhD Symposium Group photo BBS (2) 20 per cent