Reinvest or not reinvest in the host country? Learning from past divestments to plan future actions

This chapter proposes a conceptual framework to study how agency problems due to organizational context and social context in the host country shape the HQ-subsidiaries relationships and imbue their organizational learning, thus leading to different ways of learning from the past (entry-exit) and to plan for the future (re-entry). Namely, we integrate recent theoretical contributions that propose a broader view of traditional agency theory with the IB literature on the HQ-subsidiaries dyad relationships, with particular reference both to the influence of the host country features (e.g., culture, institutions) and the embeddedness of the MNEs' subsidiaries in the local context. Some preliminary evidence based on the extant empirical literature is also illustrated and discussed.