Griffin, Ray (2003) Subsidiary Divestment: The Case of CDMI Ireland 1970-2002. Irish Journal of Management, 24 (1): 13. pp. 215-228. ISSN 1649-248X
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Abstract
This paper examines an interesting and ever more common phenomenon -- the decision by a multinational corporation's (MNC) corporate headquarters (HQ) to divest itself of a subsidiary. This is an important phenomenon and one that is worthy of research within the emergent academic field of subsidiary strategy. While a number of studies have examined subsidiary divestment as a HQ decision-making process (cf. Jarillo and Martinez, 1990; Benito and Welch, 1997), this paper is to our knowledge the first academic study to undertake a theoretically grounded, case-study-based analysis of the phenomenon from a subsidiary viewpoint. It is structured as follows. First, we carefully outline the commonly used arguments (from the traditional HQ-focused MNC literature) to explain why subsidiaries are divested. We then briefly describe the subsidiary strategy literature, stressing its concentration on strategic opportunities for subsidiaries while paying no heed to the strategic threats. The second half of the paper describes the preliminary findings from an extensive empirical investigation of an individual subsidiary's strategic response when threatened with divestment. This study positions itself as an interpretive, social constructionist endeavour aimed at understanding this phenomenon. Using interview data, supplemented by ethnographic data from a multitude of sources, collected over five years, from a subsidiary that has been through five changes in ownership in the last 22 years and finally closed down in early 2002, the study suggests the following hypothesis: subsidiaries that operate within the context of a pluralistic MNC strategy are less likely to be closed than subsidiaries that operate in the context of a unitary MNC strategy. This case-study sets the agenda for further work, to examine the relative predictive power of the research hypotheses, and thus draw tentative conclusions about the reasons why some subsidiaries are closed.
Item Type: | Article |
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Keywords: | Corporate Strategy; Ownership Change; Restructuring; |
Academic Unit: | Faculty of Social Sciences > School of Business |
Item ID: | 20175 |
Depositing User: | IAM School of Business |
Date Deposited: | 08 Jul 2025 11:43 |
Journal or Publication Title: | Irish Journal of Management |
Publisher: | Irish Academy of Management |
Refereed: | Yes |
URI: | https://mural.maynoothuniversity.ie/id/eprint/20175 |
Use Licence: | This item is available under a Creative Commons Attribution Non Commercial Share Alike Licence (CC BY-NC-SA). Details of this licence are available here |
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