Archetypes of Driver Combinations Leading to Foreign Market Exit: An Investigation into European Grocery Retailing.
| Verfasser | Schmid, David |
| Posten | RESEARCH ARTICLE |
1 Introduction
The internationalization of companies is now viewed not as a process of uninterrupted progression and linear expansion but as a process of constant transformation, characterized by periods of both growth and retrenchment (e.g., Burt, 1991; Jackson & Sparks, 2005; Swoboda & Schwarz, 2006; van de Ven & Poole, 1995; Wrigley & Currah, 2003). International exit strategies are regarded as important and natural features of companies' international expansion paths (e.g., Berry, 2009; Palmer & Quinn, 2007). Consequently, scholars have intensively investigated foreign market exits over the past decades, with an emphasis on the divestment activities of manufacturing companies (for overviews see, e.g., Arte & Larimo, 2019; Coudounaris, 2017; Schmid & Morschett, 2020; Trapczyriski, 2016).
Retail-specific divestment research, however, has received much less attention. This research gap is remarkable, particularly because many large retail divestments have occurred in the past decades, most of which generated strong public attention. Between 2005 and 2020, the ten largest international retailers in the world exited 43 markets (EDGE Retail Insight, 2020). More specifically, the grocery retail sector in Europe recently witnessed several high-profile grocers exit several markets. For instance, the French retailer Carrefour exited Greece and ceased all its operations in the Balkans between 2015 and 2018. The Finnish S Group exited Latvia and Lithuania in 2017, and the British icon Marks and Spencer closed its department stores in 13 countries in Europe as a part of a global restructuring effort between 2016 and 2017.
Scholars have called for investigating international retail divestment separately from international manufacturing divestment (Burt et al., 2008), because retail differs from other sectors and its internationalization and de-internationalization follow a different logic (Burt et al., 2003; Jackson et al., 2005). Burt et al. (2002, p. 195) argued: "The nature of retailing and the practice, importance and meaning of its internationalization are for example vastly different to an oil producer or a water company". For example, manufacturing MNCs have a multitude of motives to enter foreign countries (Dunning, 1988), whereas a retailer's main motive to open subsidiaries in a foreign country is market-seeking. Moreover, the implications of exit decisions differ between retail companies and manufacturing companies. If retailers exit foreign markets, it inherently ends their ability to sell products to these markets, whereas manufacturing companies can continue to serve markets without a local manufacturing presence (McDermott, 2012). Consequently, retail-specific foreign divestment drivers may differ from drivers identified in manufacturing-based divestment literature. This becomes evident when comparing literature reviews on manufacturing-based international divestment in general (e.g., Arte & Larimo, 2019; Coudounaris, 2017; Schmid & Morschett, 2020; Tra_pczyriski, 2016) with those on retail-specific international divestment (e.g., Alexander & Quinn, 2002; Burt et al., 2008).
Divestment research is characterized by studies that investigate drivers which affect foreign divestment decisions. Many studies highlight that divestment is driven by a combination of drivers simultaneously, rather than by individual drivers (e.g., Aklamanu, 2015; Burt et al., 2018; Jackson et al., 2005; Yoder et al., 2016). While this assumption is mentioned frequently, it is rarely investigated further. Despite recent calls to investigate combinations of drivers and their joint effect on foreign divestment decisions (e.g., Berry, 2009; Burt et al., 2018; Schmid & Morschett, 2020), there are no studies--with the exception of Burt et al. (2018)--that employ this strategy.
In studies that focus on retail, scholars classify foreign retail exits and their drivers based on different criteria (e.g., Alexander & Quinn, 2002; Burt et al., 2002; Mellahi et al., 2002; Palmer, 2004). These typologies, however, usually focus on one or just a few drivers and do not sufficiently consider the intricate combinations of exit drivers from different levels that may trigger divestment decisions.
Our investigation comprises two major parts. First, we qualitatively analyze all 32 market exits that occurred amongst the 50 largest grocery retailers in Europe between 2014 and 2018 and investigate the drivers behind these exits. To do so, we take a case study approach and apply qualitative content analysis (Krippendorff, 2018; Schreier, 2012). This approach offers new insights into the type of drivers that trigger exit decisions, the frequency of their occurrence, and their combinations. We focus on grocery retailing because it has outstanding relevance in the overall retail sector. Six of the ten largest retailers in the world are grocery retailers (Deloitte, 2020). In Europe, grocery retail sales accounted for 45% of total retail sales in 2019 (EDGE Retail Insight, 2020). By choosing a specific sector, we delimit our dataset with sector-related and geographical case boundaries. This allows for a "highly visible and numerically manageable set of actions to be observed and analyzed" (Burt et al., 2018, p. 179). Second, using the configurational approach (Macharzina & Engelhard, 1991; Meyer et al., 1993; Miller, 1986), we propose five novel archetypes of exit driver combinations. The configurational approach highlights that organizational phenomena should be investigated based on multidimensional combinations of variables that dynamically interact (Miller et al., 1984). Rather than forming an infinite number of combinations, numerous dimensions of strategies, structures, etc., the variables are often grouped into a limited number of frequently occurring combinations referred to as "archetypes" (or "configurations" or "gestalts" Cerrato et al., 2016; Lim et al., 2006; Macharzina & Engelhard, 1991; Meyer et al., 1993; Roth, 1992). Archetypes may be developed conceptually or empirically (Cerrato et al., 2016; Meyer et al., 1993) and be established at various levels of analysis, "depicting patterns common across individuals, groups, departments, organizations, or networks of organizations" (Meyer et al., 1993, p. 1175). In our case, we developed archetypes empirically, representing similar and reoccurring multidimensional combinations of exit drivers at the organizational level. Building archetypes is not a novel approach in the international business literature. For instance, Cerrato et al. (2016) developed multidimensional archetypes of internationalizing SMEs, Lim et al. (2006) developed a typology of international marketing strategies of MNCs, and Roth (1992) developed archetypes for the basic configuration and coordination patterns of medium-sized firms in global industries.
Using this qualitative approach enables us to develop a full picture of each market exit, including the "wider environmental setting and institutional context" surrounding exit decisions (Burt et al., 2018). This method allows us to understand the nature of configurations and the importance of the different drivers within these configurations. Such insights cannot be obtained in the usual quantitative studies that are based on large secondary databases. Furthermore, we apply our qualitative approach to a large set of market exits. In the past, scholars have called for studies that cover more retailers than the few that were repeatedly investigated (Burt et al., 2008; Cairns et al., 2008; Etgar & Rachman-Moore, 2007). Due to the non-selectiveness of our dataset, we cover all market exits of the most important grocery retailers in Europe, including the less prominent exits. Hence, we deliver a balanced picture of the phenomena.
In our study, we found five distinct multidimensional archetypes, which include simultaneous and interrelated drivers at the subsidiary, the host-country, and the parent-company level. The presence of multidimensional archetypes within our set of retailers' market exits supports the value of the configurational approach in helping researchers develop a better understanding of these phenomena, and thus helps extend theory on the subject. In line with the findings of Burt et al. (2018), who recently showed that different configurations of exit drivers exist over time, we investigate different configurations that co-exist simultaneously.
The rest of this paper is structured as follows. The second section provides a literature review on research about drivers that lead to foreign market exit, with a focus on the field's past efforts to characterize and classify retailers' international divestments and their drivers. In the third section, the research approach is introduced, providing an overview of the dataset and the applied methodology. The fourth section illustrates the individual exit drivers (and their combinations) found in the analysis. This is followed by a derivation and discussion of the five archetypes of driver combinations found in the data with a focus on the typologies discussed previously. The paper ends with a discussion and a conclusion composed of theoretical and empirical contributions, managerial implications, limitations, and implications for further research.
2 Literature Review
Research about international divestment drivers of MNCs has been an increasingly important area of interest in international business literature since the mid-1970s, mainly focusing on manufacturing firms. While research coverage on international divestment still lags behind research on international entry and expansion (Tan & Sousa, 2019), recent literature reviews (e.g., Arte & Larimo, 2019; Coudounaris, 2017; Schmid & Morschett, 2020; Trapczyiiski, 2016) show many existing studies on international divestment drivers. Schmid and Morschett (2020), for example, detected 283 studies investigating international divestment drivers. Furthermore, their...
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