Demerged multinational enterprises: a study of post-demerger international strategies

Abstract

Demerged Multinational Enterprises (DMNEs) that emerge with an independent corporate status after a demerger from a parent multinational enterprise (MNE) are unique firms with a great variety of post-demerger strengths, weaknesses and international strategic responses. This paper adopts a firm-level internalisation theory approach to MNE strategy to empirically explore the characteristics and post-demerger strategies of four focal case DMNEs. Five years of post-demerger data from annual accounts, newspaper articles and databases were analysed. Analysis of the strategic responses of the four DMNEs has allowed a typology that distinguishes four DMNE types to be proposed. This typology explains the international strategies of DMNEs by the degree of post-demerger strategic dynamism that is possible and the need to address the quality of the firm specific advantages endowed to the DMNE in the demerger.