De-Internationalization: The Other Side of Internationalization

Companies rightly regard internationalization decisions as strategic; they are long-term, require and bind up resources, and have important implications for companies’ performance. But internationalization is inherently demanding and risky, changes are likely to happen, and there is no guarantee of a positive outcome. The notion of de-internationalization captures the other side of internationalization: actions that reduce a company’s engagement in or exposure to international or border-crossing activities. One important dimension of de-internationalization is its extent, which ranges from a total withdrawal from international operations to partial retractions, such as exiting from a particular market, and minor adjustments, such as downscaling activities. Another key dimension is the volition aspect of de-internationalization, which distinguishes between de-internationalization decisions that are principally taken by the companies themselves, and those that have been imposed upon the companies by other actors, such as host-country authorities. There are three main types of de-internationalization: reductions in trade volume, market withdrawals, and divestments. Extant research, while limited, has tended to take either a behavioral perspective or an economics perspective. The latter takes a choice (or decision) perspective on de-internationalization, while the former emphasizes the process aspects of such actions. De-internationalization does not need to be the end of the road for companies’ foreign involvement. There is mounting evidence that de-internationalization can be temporary, with companies re-entering foreign markets after a time-out period, often by implementing better suited approaches when retrying.