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Publication date: 2 August 2013

Young‐Ryeol Park, Sangcheol Song and Eun‐kyoung Rhee

The purpose of this paper is to examine whether Korean multinational corporations (MNCs) in the electronics and steel industries do shift their production across their foreign…

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Abstract

Purpose

The purpose of this paper is to examine whether Korean multinational corporations (MNCs) in the electronics and steel industries do shift their production across their foreign subsidiaries, located in different countries, as exchange rates fluctuate in foreign countries.

Design/methodology/approach

A case study was taken as a qualitative methodology to examine whether MNCs actually shift their production as multinational operational flexibility perspective predicts.

Findings

From a case study of two Korean MNCs (LG Electronics and POSCO), it was found that even facing heightened production costs associated with host country currency appreciation, Korean MNCs do not shift their production to less costly locations due to industrial characteristics, limited capacity, and high tariff barriers. It was also found that they reduce the production costs internally and they also negotiate the costs with employees and suppliers to adjust the production costs associated with appreciated currency.

Practical implications

Our findings imply that certain industrial and environmental constraints make it difficult for MNCs to take flexible actions as multinational operational flexibility perspective predicts. The findings also shed additional light on the less‐explored argument over operational flexibility and vertical integration associated with cross‐country shifts of value chain activities, including production or sales.

Originality/value

Almost all literature taking the multinational operation flexibility view argues that MNCs are able to shift their productions for their own benefits. However, the authors of this paper find from their case studies that firms take advantage of other methods than production shifts in their responses to exchange rate fluctuations in their host countries. Thus this study gives an insight into when and how firms behave as the theory predicts.

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Article
Publication date: 9 November 2022

H. Kent Baker, Deepak Kumar and Neelam Rani

Foreign divestment of subsidiaries is a growing research field. The global increase in investments has led to more divestments. However, much about the processes and circumstances…

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Abstract

Purpose

Foreign divestment of subsidiaries is a growing research field. The global increase in investments has led to more divestments. However, much about the processes and circumstances leading to foreign divestments (FDs) requires further investigation. This study aims to review and consolidate the existing literature on foreign divestment and identify avenues for future research.

Design/methodology/approach

This study performs a systematic literature review and bibliometric analysis of studies on FDs to highlight the traditional and emerging perspectives in the field. This work examines foreign divestment theories based on operations, human resources, finance and marketing business functions.

Findings

This study sets forth a basic foreign divestment framework and highlights potential research areas. Future studies should expand to emerging economies, explore complex relationships, distinguish foreign divestment types and identify the limits of various theories and perspectives.

Originality/value

This study discusses traditional theories such as economies of scale, portfolio adjustment, reverse eclectic, real options and transaction cost economies. This study also examines emerging perspectives: attention-based, behavioral, committedness, contingency, favoritism, flexibility, hysteresis, legitimation, network and resource-based views. This study uses traditional and emerging theories to explain foreign divestment decisions in different business functions.

Details

Qualitative Research in Financial Markets, vol. 15 no. 2
Type: Research Article
ISSN: 1755-4179

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