The Dynamics of International Market Withdrawal

Abstract

This study focuses on the decision-making process of international market withdrawal within the scope of international market portfolio management. A comparative study of eight withdrawal cases in four multinational firms results in a six-phased decision-making model that is driven by threat-rigidity behavior, failure-induced learning and political dynamics. Two types of international market withdrawal are identified. On the one hand, a tactical withdrawal is the outcome of threat-rigidity and exploitative learning at the level of executive management. A strategic withdrawal, on the other hand, is characterized by a process of failure-induced exploratory learning initiated by middle level challengers. In contrast to a tactical withdrawal, which remains an isolated decision and does not interfere with other international ventures of the business unit, a strategic withdrawal turns out to be a germ of strategic (re)orientation of the business unit’s entire international market portfolio. Whether a market withdrawal turns out to be tactical or strategic ultimately depends on the autonomy, the amount and the relevance of challengers’ market and business knowledge.Economics ;