International market exit by firms: Misalignment of strategy with the foreign market risk environment

Kubilay S.L. Ozkan

International Business Review, 2020, vol. 29, issue 6

Abstract: International market withdrawals by firms continue to persist regardless of geography, industry, firm experience, and national origin. The extant literature argues that a host of factors, such as firm characteristics, organizational capabilities, host country environment, international business risks, strategy and strategic choices are among the likely reasons for firms to prematurely exit the markets they have entered. Drawing from the contingency theory, we contend that underlying most market exit events is the misalignment of firm strategy with the foreign market risk environment. This happens when managers fail to optimize strategy formulation and implementation in view of the foreign market risk environment. Based on an in-depth examination of 62 cases of foreign market exits via pattern coding using NVivo 12, we delineate common patterns accounting for market withdrawals. We then formulate propositions with respect to how misalignment between strategy and risk environment interferes with foreign market exits in accordance with the contingency theory. We conclude with a discussion of theoretical implications, managerial recommendations, and suggestions for future research and limitations.

Keywords: International market exit; Divestment; De-internationalization; Strategy formulation; Strategy implementation; Commercial risk; International business risk; Risk readiness (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (2)

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DOI: 10.1016/j.ibusrev.2020.101741

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