Understanding export exits: the roles of institutional distance direction, strategy adaptation and experience similarity

Alongside divestments or joint venture terminations, export exits constitute a widespread form of firm de-internationalization, although the related research was comparably less abundant as opposed to research on international divestments until recently. Research has demonstrated that an increase in host country environmental adversity increases the likelihood of exit but there also hints that the relationship with institutional distance may not be simple and linear, depending on the context, such as the type of markets under study. And yet, the majority of existing studies does not take into account whether distance is caused by institutionally more of less developed foreign countries. Regardless of the type of foreign market context, another question arises to what extent entrants should adapt their foreign market strategy in order to gain legitimacy in the market and increase survival chances. Not least, a systematic understanding of prior experience in different types ofmarkets in conjunction with different types of export markets, has remained absent. Therefore, the present chapter will contribute to the aforesaid gaps by studying export exit likelihood in markets with different institutional profiles, taking into account the roles of export strategy adaptation and prior experience gained in different institutional settings. In order to implement these objectives, we draw from the institution-based view of international business with regard to the characteristics of export markets and to the concept of legitimacy in foreign markets. We complement this logic by building on the fundamentals of organizational learning theory in order to discuss the applicability and limitations of using context-specific experience. We contribute to extant research on export exits by decomposing institutional distance into negative and positive and providing some empirical support that their effect on exit likelihood is distinct. Moreover, we also decompose previous export experience into dissimilar and similar to the institutional context under study, likewise showing that the two have different implications for the export exit. Finally, we also corroborate the relevance of strategy adaptation for export exit, nuancing its effect depending on the prior experience of the exporter.