Политические и институциональные драйверы международных дивестиций российскими ТНК и их эффект на финансовые показатели

In a turbulent business world, it is a common occurrence that companies withdraw their operations and subsidiaries either partially or even fully due to a great number of reasons, thus rebalancing their portfolios and adapting strategies to new realities. This process is known as divestment that implies business structure reduction, once a company gets rid of its part, subsidiary, unit or equity. There may be used words “divestiture”, “exit”, “closure”, “liquidation”, “sell-off”, “disposal” and others (Panibratov & Brown, 2018) as well referring to the divestment process. Generally, there are two types of investments and correspondingly divestments: portfolio and foreign direct investments (FDI). Portfolio divestment implies a disposal of a passively held financial asset such as stocks or bonds without a significant controlling stake in the hands of a retail investor driven mostly by short-term benefits, while FDI relates to investments in real producing operation facilities set up abroad with an ownership stake and voting power of at least 10% pursuing a lasting long-term interest (World Bank, 2020).The present study is solely concerned with the foreign direct divestments, whereas portfolio divestments are not included.
The topic’s relevance is especially growing concerning withdrawals from the foreign markets, where the level of uncertainty is much higher compared to the familiar domestic market environment. According to the most recent “2020 Global Corporate Divestment Study” conducted by Ernst & Young, 78% of respondent companies plan to reshape their asset portfolios in the upcoming 12 months implying divestments, what has been undoubtedly affected by the COVID-19 breakout, however the preceding year 2019 showed an alarmingly high result as well – 63% (Ernst & Young, 2020). Mostly the divestments are driven by poor economic performance at a subsidiary or parent-level, as the majority of the existent literature suggests. For example, one of the first researchers of the topic Jagdish Sachdev (1976) in his study of the foreign divestment experience of the British MNEs concluded that financial factors, especially low profitability, commercial difficulties and fund transfer restrictions are the strongest ones in explaining the divestment decisions. Besides, Roger Torneden (1975) and Jean Boddewyn (1979) listed the importance of poor performance of international subsidiaries as a condition pushing the companies to abandon some of their foreign-based units thus optimizing their portfolios and business operations. What is more, later works emphasized the significance of poor economic results of foreign subsidiaries as the major driving factor for divestment as well (Berry, 2010; Sousa & Tan, 2015; Wu, Strange, & Shirodkar, 2021).
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However, other non-economic factors are as much important as the economic ones. To all appearances, attention given to the political and institutional factors affecting foreign divestments (FD) is increasingly growing, especially concerning those that cover the institutional differences between the home and host markets (Kostova , et al., 2020). Its effect in terms of both a home and a host country on the divestment decision is still understudied, since most of the previous literature was mostly concerned with the internal firm-level factors, rather than country-level ones (Borga, Ibarlucea Flores, & Sztajerowska, 2020). However even among those few papers dedicated to studying the effect of institutional and political antecedents on the FD likelihood, the authors mostly tend to focus on the general macroeconomic level, rather than narrowing down to the specific institutional and political contributing determinants of the environmental uncertainty (Boddewyn, 1979; Benito, 1997; Henisz & Delios, 2004; Moschieri & Mair, 2008; McDermott, 2011; Berry, 2013). For example, Dhanaraj and Beamish (2009) in their paper on the foreign subsidiary survivability under the host country’s institutional environment pressures employ quite discrete variables as well and conclude that a lower political and social openness of the host country leads to higher mortality rates of the foreign business units, especially with regards to JVs where a partner’s commitment is much looser than in a wholly owned subsidiary (WOS).
The most recent works try to fill the gap and suggest elaborated variables to measure political risk and institutional uncertainty, as in the example of frictions number that a company has with a local host government (Blake & Moschieri, 2017), changes in the home country, political singular features such as democratic protests, political freedom, level of transparency in public transactions (Soule, Swaminathan, & Tihanyi, 2014) or political capabilities that companies develop over time (Schnyder & Sallai, 2020). Nevertheless, most of the studies yielded very ambiguous results with regards to the impact of political and institutional factors on the divestment phenomena, that is why it needs to be studied further with different samples and approaches. The prior research concentrated primarily on the divesting experience of MNEs from the developed home countries, such as the USA, Japan, Korea and some European countries, so creating a bias against the MNEs from emerging markets (Arte & Larimo, 2019). That is quite understandable and logical, since the companies from the developed economies started the internationalization process much earlier than the emerging ones. Besides, many developing countries have long been under the Soviet influence, battling against the capitalist West and having no possibility to grow beyond their regions. As a result, the MNEs from the West as well as Japan and South Korea were expanding significantly abroad till the 1990-s,
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while the newly appeared countries on the post-Soviet territory were just beginning their independent existence, making first steps towards international expansion and acquiring new experience. Now we can clearly observe, that the MNEs from developing countries embark on the same path of their international business structure reshuffling as well under the influence of many determinants.
This study is primarily based on the institutional theory, since the political and institutional factors are playing an increasingly bigger role in the busines world nowadays, pushing many MNEs to divest their foreign subsidiaries or units due to unfavorable changes in political landscape or deteriorated quality of institutions (World Investment Report, 2019). In this regard, the case of the Russian MNEs is especially relevant these days, because the Russian business must operate in the international markets under the effect of sanctions levied since 2014 that deteriorated drastically the international expansionary potential of both the Russian companies and the Russian national economy to grow. The sanctions happen to be a watershed moment and a distinguishing feature of the Russian case compared with the rest of the emerging markets, especially BRIC countries, making it worth studying separately (Liuhto, 2015; Andreff, 2016). Besides, the case of the Russian MNEs divesting their foreign subsidiaries is still the least studied among BRIC and other relatively big emerging markets, because there are already some academic studies of the institutional and political factors effect on Chinese (Bai, Jin, & Qi, 2013), Indian (Das, 2021) MNEs FD, but none yet comprehensive research on Russian companies (Arte & Larimo, 2019).
As a result of the politically motivated sanctions, leading major Russian MNEs have had to either fully sell or partially reduce stakes in their assets located abroad due to increased uncertainty and decreased access to the international capital markets, thus losing strongholds and production facilities in some key markets such as neighboring Ukraine, European Union and the USA (Brown, Pantich, & Baranovskiy, 2017). However, it is not that simple to establish a straight strong correlation between the introduction of sanctions and the divestment event, since there are many other factors affecting the decision to exit the market, above all the institutional distances existing between the home and a host country. And therefore, we can observe that the same Russian MNEs that decide to sell-off their assets in some foreign markets, carry on owning other international assets and facilities abroad regardless of the sanctions (Zagashvili, 2017). That logically leads the researcher to a question: what are the main institutional and political drivers for the decision to divest foreign units or subsidiaries
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by Russian MNEs and how powerful they are in explaining FDs? Besides, here arises another justified question: what is the effect of the FDs on the financial performance and healthiness of the Russian MNEs, whether that entails improvement of the balance sheet after getting rid of some sunk troubled assets or on the contrary, brings more issues?