The timing and mode of foreign exit from conflict zones: A behavioral perspective

Li Dai (), Lorraine Eden () and Paul W. Beamish ()
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Li Dai: Loyola Marymount University
Paul W. Beamish: Western University

Journal of International Business Studies, 2023, vol. 54, issue 6, No 6, 1090-1104

Abstract: Abstract We examine the timing and mode of firm exits from host-country conflict zones. We argue that timing and mode are interdependent decisions where decision ordering matters, and show that a firm’s prioritizing of either exit timing or mode is dependent on the relative salience of two behavioral stimuli: (1) the firm’s own experience (i.e., its performance shortfall), and (2) the experience of peer firms (i.e., their exits). Using instrumental variables modeling on a sample of 101 Japanese MNE exits from 11 conflict-afflicted countries between 1991 and 2005, we demonstrate that, when mode is prioritized over timing, partial exits tend to occur earlier and whole exits later. However, when timing is prioritized over mode, the decision choices reverse: earlier exits tend to be whole and later exits partial. The outcome of one decision therefore affects that of the other in a unique and predictable manner, such that the ordering of the decisions both produces and precludes strategic choices. Our findings, based on a multidecision problem that has traditionally been treated as a single decision (i.e., foreign exit), delineate expanded boundary conditions for satisficing, as well as reconcile optimizing and satisficing behaviors.

Keywords: foreign exit; exit mode; exit timing; violent conflict; conflict zones; behavioral theory; satisficing (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (4)

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DOI: 10.1057/s41267-022-00574-y

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