Do global dynamic managerial capabilities affect MNEs' divestments of their overseas subsidiaries?

Divestment of foreign subsidiaries by multinational enterprises (MNEs) is a common, yet under-researched phenomenon. The main contribution of this paper is to examine the effects of the global dynamic managerial capabilities (GDMCs) embedded in the top management teams (TMTs) of the MNEs on the likelihood that they will divest their foreign subsidiaries. Following Tasheva and Nielsen (2022), we consider three GDMCs, viz.: international human capital; international social capital, and international managerial cognition. Our empirical analysis confirms that all three GDMCs have significant negative impacts on the likelihood of divestment of foreign subsidiaries (or, equivalently, significant positive impacts on the likelihood of retention of foreign subsidiaries). We also explore the impacts of subsidiary age on the likelihood of retention, and find that longstanding subsidiaries are more likely to be retained than newly-established subsidiaries, and that age enhances the impacts of the three GDMCs.