Subsidiary divestment of EMNEs – Does home country matter?

Abstract

This research is a response to a call for studies addressing the issue of de-internationalization in the context of emerging countries. It does so by examining the divestment of foreign subsidiaries of Brazilian multinational firms. Adopting the Institutional-Based View and Dunning’s Investment Development Path, the study investigates whether institutional characteristics of the home country environment influence the divestment of emerging market multinational enterprises. The results indicate that receiving governmental financial support to establish foreign subsidiaries can lead to higher rates of divestment. Furthermore, divestment tends to be higher when an enterprise’s home country counterparts are divesting from the same host country. Conversely, having market supporting institutions in the home country diminishes the likelihood of foreign divestment.