Home-Country Institutional Pressure and Foreign Divestment: Evidence from Developed-Country Multinationals in China

Qihu Wang; Yue Gong; Yilan Gao

doi:10.62177/apemr.v2i5.580

Authors

Qihu Wang Shanghai Institute of Technology
Yue Gong Shanghai Institute of Technology
Yilan Gao Shanghai Institute of Technology

DOI:

https://doi.org/10.62177/apemr.v2i5.580

Keywords:

Home-Country Institutional Pressure, Investment Opportunities, DMNEs, Institution-Based View, Foreign Divestment

Abstract

In recent years, advanced economies have increasingly adopted restrictive outward-investment measures, creating unprecedented institutional pressures on developed-country multinational enterprises (DMNEs). Yet DMNEs’ responses, particularly foreign divestment decisions, remain heterogeneous and underexplored. Building on the institution-based view and investment opportunity perspective, this study investigates how home-country institutional pressure influences DMNEs’ divestment from China and how investment opportunities moderate this relationship. Using a panel dataset of DMNEs listed in China from 2018 to 2024, we find that home-country institutional pressure significantly increases foreign divestment, and that this effect is amplified when firms face abundant investment opportunities. These findings extend international business research by (1) positioning home-country institutional pressure as an active driver rather than a background condition of DMNE strategy, and (2) identifying investment opportunities as a critical boundary condition shaping firm responsiveness. The study also offers managerial and policy insights into managing strategic choices under rising geopolitical and institutional constraints.

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