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A systematic review of the literature on industrial divestment

A systematic review of the literature on industrial divestment The purpose of this paper is to review the existing research on industrial divestment in order to identify the reasons for it, the process whereby it is achieved, and the outcomes of industrial sell-offs and closures. The study reports the main findings that have gained acceptance in the literature, gaps in the research and potential directions for future research.Design/methodology/approachA three stage systematic literature review protocol was used to conduct this review. The results are organized according to an “Antecedents – Process – Outcomes” framework.FindingsThe traditional accounts of industrial divestment have been framed in terms of firms’ weak performance and over-diversification as antecedents to divestment, leading to corporate governance issues. However, the list of antecedents of industrial divestment is more extensive. There is no consensus over the impact of some factors on divestments, as is the case of firm and unit size. The results are not conclusive as to whether firm performance improves after divesting.Research limitations/implicationsFuture research should analyze the relationship between the antecedents of investment and divestment. The divestment process is not well studied and more studies that engage in theory building are needed, namely, on primary data and examining the short-term and long-term impacts of divestment on performance.Practical implicationsThis review offers a comprehensive synthesis of the antecedents, the process and outcomes of divestment through sell-offs and closures. Factors such as environmental conditions and the entry mode strategy are important in determining the divestment of subsidiaries. Divestments may be positively or negatively regarded by shareholders, depending on the context of the firm. Promoting managerial changes facilitates divestment.Originality/valueThis paper synthesizes knowledge of the main reasons as to why firms completely dispose of their assets, contributing to this under-researched field. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Baltic Journal of Management Emerald Publishing

A systematic review of the literature on industrial divestment

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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1746-5265
DOI
10.1108/bjm-01-2018-0040
Publisher site
See Article on Publisher Site

Abstract

The purpose of this paper is to review the existing research on industrial divestment in order to identify the reasons for it, the process whereby it is achieved, and the outcomes of industrial sell-offs and closures. The study reports the main findings that have gained acceptance in the literature, gaps in the research and potential directions for future research.Design/methodology/approachA three stage systematic literature review protocol was used to conduct this review. The results are organized according to an “Antecedents – Process – Outcomes” framework.FindingsThe traditional accounts of industrial divestment have been framed in terms of firms’ weak performance and over-diversification as antecedents to divestment, leading to corporate governance issues. However, the list of antecedents of industrial divestment is more extensive. There is no consensus over the impact of some factors on divestments, as is the case of firm and unit size. The results are not conclusive as to whether firm performance improves after divesting.Research limitations/implicationsFuture research should analyze the relationship between the antecedents of investment and divestment. The divestment process is not well studied and more studies that engage in theory building are needed, namely, on primary data and examining the short-term and long-term impacts of divestment on performance.Practical implicationsThis review offers a comprehensive synthesis of the antecedents, the process and outcomes of divestment through sell-offs and closures. Factors such as environmental conditions and the entry mode strategy are important in determining the divestment of subsidiaries. Divestments may be positively or negatively regarded by shareholders, depending on the context of the firm. Promoting managerial changes facilitates divestment.Originality/valueThis paper synthesizes knowledge of the main reasons as to why firms completely dispose of their assets, contributing to this under-researched field.

Journal

Baltic Journal of ManagementEmerald Publishing

Published: Jun 18, 2019

Keywords: Divestment; Review; Closure; Sell-off

References