In many large diversified corporations there is a largely prevalent habit to consider divestment decisions as ‘top secret’: information concerning potential divestitures is restricted to top management and only a handful of senior managers are involved in the decision making process. The major assumption underlying such behaviour is the fear of failure; that is, top management is concerned about involving line—generally divisional—managers in the process of making up one's mind to divest (a time consuming process as will be seen later) and searching a potential acquirer, in the fear that such involvement might work in counteractive ways and perhaps cause the abortion of the project. As a result, information is most often withheld, decisions in progress are kept secret; an ‘underground’ strategy is developed. The purpose of this article is to show that the most successful divestments are precisely those where line management's co‐operation has been elicited at very early stages and to suggest that such a participative management mode is likely to produce better results. Our research, based on the study of 14 divestments in the US and Europe (see Appendix), thus shows that the division manager is a key person on the divestment chess‐board and accomplishes varied missions.
Strategic Management Journal – Wiley
Published: Apr 1, 1981
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