Abstract
Although international entry and expansion has been a particularly important topic in the literature, there has been little research effort to explain firms’ exit decisions from foreign markets. Drawing on the notion of fit theory together with moderation contingent logic, this study investigates the effects of international performance and internal strategic fit as well as the moderating impact of cultural distance and international experience on the firm's exit decision. The results indicate that strategic misfit and poor international performance have a detrimental effect on the firm's survival in the foreign market. Furthermore, the results suggest that cultural distance moderates the impact of the internal strategic fit and international performance on the exit decision. In addition, the authors find a significant three-way interaction between international performance, cultural distance, and international experience. Using data collected from multiple informants in Chinese outward foreign direct investment firms, this study generates new insights for academics and practitioners.
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