A Role of Foreign Divestments for Early Internationalizing Firms

Hirokazu Kano, Toshimitsu Ueta

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Abstract

Scholars in the field of international entrepreneurship (IE) have recently directed their attention toward the post-entry processes of early internationalizing firms. Existing studies have extensively examined expansionary moves and have found that early foreign entry is likely to facilitate subsequent expansion. However, the role of contracting moves such as foreign divestment has received less attention. Drawing on the Penrosean perspective, we investigate how foreign divestment affects the subsequent expansions of early internationalizing firms. We propose that, while expansion into culturally distant markets hinders subsequent expansions, foreign divestment can mitigate this Penrose effect by releasing and redeploying managerial resources. We also hypothesize that given the imperfect fungibility of managerial resources across locations, the mitigation of Penrose effects by divestments is pronounced for early internationalizing firms that have divested their subsidiaries in culturally distant markets. Our 18-year longitudinal study of 132 Japanese early internationalizing firms supports our hypotheses.
Original languageEnglish
Title of host publicationProceedings of the Eighty-fourth Annual Meeting of the Academy of Management
EditorsSonia Taneja
Number of pages1
Place of PublicationValhalla, NY
PublisherAcademy of Management
Publication date2024
DOIs
Publication statusPublished - 2024
EventThe Academy of Management Annual Meeting 2024: Innovating for the Future: Policy, Purpose, and Organizations - Chicago, United States
Duration: 9 Aug 202413 Aug 2024
Conference number: 84
https://aom2024.eventscribe.net/

Conference

ConferenceThe Academy of Management Annual Meeting 2024
Number84
Country/TerritoryUnited States
CityChicago
Period09/08/202413/08/2024
Internet address
SeriesAcademy of Management Annual Meeting Proceedings
ISSN0065-0668

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