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Pitting real options theory against risk diversification theory: International diversification and joint ownership control in economic crisis
- Authors
- Chung, Chris Changwha; Lee, Seung-Hyun; Beamish, Paul W.; Southam, Colette; Nam, Daeil (Dale)
- Issue Date
- 1월-2013
- Publisher
- ELSEVIER SCIENCE INC
- Keywords
- Real options; Risk diversification; Economic crisis; International diversification; Joint ventures; Subsidiary divestment
- Citation
- JOURNAL OF WORLD BUSINESS, v.48, no.1, pp.122 - 136
- Indexed
- SSCI
SCOPUS
- Journal Title
- JOURNAL OF WORLD BUSINESS
- Volume
- 48
- Number
- 1
- Start Page
- 122
- End Page
- 136
- ISSN
- 1090-9516
- Abstract
- This study examines how MNE divestment decisions differ according to real options vs. risk diversification perspectives. We develop competing hypotheses in relation to international diversification and joint ownership control. Empirical results give consistent support to the real options perspective. We find that large MNEs with greater international diversification are less likely to divest their subsidiaries during times of economic crisis. The negative effect of joint ownership control is however manifested in both crisis-stricken and non-crisis country subsidiaries as well as in their interaction effect. (C) 2012 Elsevier Inc. All rights reserved.
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