management internatioinal review

Disinvestment: A New Problem in Multinational Corporation Host Government InterfaceAuthor(s): Jagdish C. SachdevSource: Management International Review, Vol. 16, No. 3 (1976), pp. 23-35Published by: SpringerStable URL: http://www.jstor.org/stable/40227275 .

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JAGDISH C. SACHDEV

DISINVESTMENT: A NEW PROBLEM IN MULTINATIONAL CORPORATION

HOST GOVERNMENT INTERFACE

Foreign investment, over the years, has given rise to many difficulties in the relationships between multinational corporations and host governments. In more recent times foreign disinvestment has been the cause of even greater problems. This is currently emphasized by the case of Chrysler in the U.K. and the problems faced by a number of multinationals operating in Ita- ly. The subject is made additionally complex by the secrecy with which these problems are han- dled, and is further clouded by misconceptions that this phenomenon only results from nationalisation or expropriation on the part of host nations. In reality, disinvestment is equally sensitive, if not more often, due to the voluntary actions of the multinational corporations themselves in withdrawing their resources from the host country. Emotional attitudes of management towards disinvestment decisions, and the secretive atmosphere surrounding such decisions inhibits any rational discussion on the subject.

The study on foreign disinvestment at the International Business Unit so far reveals that the issue of disinvestment has become a source of major conflict and tension between corporate managements and host governments. In spite of the fact that foreign disinvestment is as important an element of international trade as foreign investment, it has attracted very little attention.

Whilst the pre-requisites of any foreign investment venture are negotiated to the last detail by the various parties concerned and are considered as steps towards the internationalization of world resources, the ramifications of foreign disinvestment are discussed in secret by a handful of personnel, and are considered as tools for both exploitation and bargaining. This paper looks into this emotionally complex subject of disinvestment as a potential source of conflict between multinational corporations and host nations. In order to find a common ground of interest an at- tempt will be made to put forward a framework of interaction involving the corporate management, host and home governments and international organizations. It finally explores the implications of disinvestment as a policy of dilution of ownership and as a built-in policy for future investment.

The Literature

In contrast to foreign investment, the literature on the subject of foreign disinvestment is both limited and fragmented. The increasing importance of this subject is suggested by the research into the general area of multinational corporations and host governments which is being con- ducted at many major study centres. For example, work by Professor Raymond Vernon1 on the

Mr.]. C. Sachdev is a Research Fellow at The University of Manchester Institute of Science and Technology, Manchester, England.

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'Multinational Enterprise and Nation State', and by Professor Behrman2 on the causes of increasing tension resulting from the development of the multinational enterprise has been a source of extensive information.

Other eminent contributors, whose studies have helped in the understanding of the complex nature of international business and government affairs, are Fayerweather3, Boddewyn4, Kapoor5, Brooke and Remmers6. As a by-product of investigation into other areas of international business, these latter studies have provided an insight into the government-company interface. Studies on foreign disinvestment by Torneden7, Gilmour8, and Truitt9 are the first steps in the direction of in-depth academic research. Whilst these have provided some valuable know- ledge, they fall short on the particular issue of the interface between multinational corporations and host governments. Other observers, like Hayes10, Davies11, Wallender12, Moose and Zakon13, and Lovejoy14, have attempted from a purely company rationale to elaborate on the subject of disinvestment.

Literature on the more specific topic of foreign disinvestment as a major cause of conflict is even more limited. Professor Hirschman15 and Raul Prebisch16 have each contributed on this aspect of the disinvestment issue. They highlighted the need to, and importance of U. S. multinational corporations undertaking disinvestment on a voluntary basis from certain Latin American countries. Their proposals caused some controversy amidst multinational corporations, governments, and other concerned groups on the feasibility of voluntary disinvestment as either a 'panacea or pitfall'17. In recent years this important issue has received little or no attention, despite its becoming increasingly significant.

Nature of Foreign Disinvestment

In attempting rational discussion on the subject of foreign disinvestment, one should perhaps look at both its origin and terms of reference. In the present context the term "foreign disinvestment" is described as: 'Withdrawal of an active foreign investment from the host country on a voluntary or involuntary basis.' The term 'active foreign investment' forms an important feature of the definition. It applies to those foreign operations which employ citizens of the host nation in the production of goods and services. It also represents all those factors required for the carrying out of day-to-day operations in the host country; capital, technology, management skills and more importantly, access to third country foreign markets. Withdrawal of these resources can either be partial or complete.

Briefly, voluntary foreign disinvestment encompasses cases of withdrawal as a result of a company's own decisions. A company may decide to disinvest in a particular foreign operation on the basis of unsatisfactory profit performance, or lack of both suitable management and liquid resources. In certain cases outdated technology can play an important part in the disinvestment decision-making process. The company may either be unable to afford modernization, or may not consider applying advanced technology in the same foreign market as a profitable proposi- tion. Studies show that failure can also be attributed to lack or breakdown of communications between the corporate and foreign subsidiary's managements on such important matters as corporate staffing policies, research and development and corporate objectives.

In recent years parent companies' activities have been aimed at the rationalization of resources within a corporate framework. Fund raising in support of high growth projects, either at home or in other countries, the elimination of low market share products, and product lines, have been the reasons for the escalation of voluntary disinvestment. The prevalent tendency of certain host governments to impose controls and restrictions, together with the removal of incentives to foreign investors, has motivated a number of foreign companies to refrain from further overseas investment18. In many instances, this tendency has been detrimental to the existing level of

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foreign investment. It has also been observed that a multinational company may threaten to withdraw in order to counteract specific measures imposed, and also as a means of pressurising the host government to gain certain concessions.

Within the category of involuntary disinvestment are instances where a foreign company is compelled by the host government to disinvest its operations. This may be a result of nationalisation, expropriation, or some form of localisation, By 'localisation' the author here means when a foreign company is required to dilute its ownership and management control in accordance with host government plans and aspirations for control of foreign operations in the country.

With the decolonisation of many countries and loosening of Imperial ties, the aim of many newly independent countries is to run their development programmes on their own initiative and without outside interference in their economy. Progress towards industrialization in many such contries, in both private and public sectors, has been achieved through the joint efforts of multinational corporations and the host nations themselves. It can be argued that without outside assistance, mainly from the multinationals, most of these countries would be lacking sufficient resources for their development programmes. In recent years, an increasing number of host nations have started to question the contributions of the multinationals towards this progress. This questioning has led to a consideration of policies of nationalisation or localisation, thereby causing some 'involuntary* disinvestment19.

Foreign Disinvestment - Coming of an Era

In reflecting upon the history of international trade, it is evident that particularly during the past quarter of a century European and American multinational corporations have expanded their activities abroad at a frantic rate. The same is true of Japanese multinational corporations which are comparatively new in the field of international trade. While some multinationals have acquired bountiful returns from their foreign operations, others have produced little or no re- ward. After such rapid growth abroad, multinationals are now entering upon a new era of con- solidation, and the tendency now is that their growth rate will decelerate20. The important part of their future strategy will be the relocation of their existing world- wide investment interests from one host country to another. As a consequence many multinational corporations have been undertaking major structural regroupings and reorganizations of the basic resources important to host nations; supply of capital, and technical know-how21.

Many host nations whose future plans for development and industrialization depend upon a prolonged inflow of foreign investment, have started to show signs of alarm. Equally affected are those nations, in which a reduction in the existing level of activities will produce serious social and industrial implications. As a result of companies' policies of reorganization some host countries are concerned on two main accounts. First, they are compelled to make drastic cuts in their long-term development plans for industrialization, due to the anticipated lower rate of new foreign investment. Secondly, similar cuts are foreseen in existing plans due to the upsurge in foreign disinvestment. As the first issue is outside the scope of this paper, attention will be con- centrated on the latter issue with reference to the multinational corporation-host government interface.

Observers have forecast that if 1960s was the decade of the greatest number of mergers, expansion, and joint ventures the 1970s promise to be the decade for un-mergers, contraction and partnership divorce on a national as well as international level22. The first half of this decade has already proved some reality in the above statement. For example, in 1971 there were 185 instances of American foreign disinvestment23 as against 93 cases of British24. Figure 1 indicates the number of instances of foreign disinvestment during the period 1968 to 71 and 1968 to 74 by

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American and British multinationals respectively. The average yearly increase shows almost 40 per cent in respect of both British and American foreign disinvestment during this period.

In the absence of any published financial statistics, it is difficult to ascertain the exact amount involved in foreign disinvestment. The sums are certainly huge. Figure 2 gives an indication of the capital involved in British foreign disinvestment.*

Figure 1 Number of Foreign Disinvestment Cases by British and American Multinationals

Figure 2 Foreign Disinvestment by British Multinationals

* Financial statistics presented in this paper on British Foreign Disinvestment, as interpreted by the De- partment of Trade and Industry, merely represent lower net indebtedness of the foreign affiliates to the parent companies.

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In considering the power of a multinational corporation Sir Ernest Woodroofe, past Chairman of Unilever, when speaking at an international conference on multinationals claimed that25: "Any individual enterprise, national or international, undoubtedly has one specific power and, ultimately, only one - the power to invest, or to refrain from investing or withdraw its existing investment "

From the viewpoint of the multinational corporation-host government interface, the above statement emphasises three vital issues of present day multinationals: the power to invest; refrain from investing further; and to disinvest. Those host nations which have already experi- enced the investment phase, with all its conflicts, are now much concerned by the disinvestment phase. This not only affects the multinational corporation-host government interface but is also a major source of conflict and misunderstanding between governments weakening international integration.

During the course of this study it has been stated repeatedly by the host governments that foreign companies often use disinvestment as an instrument of bargaining at the negotiating stage. Putting such pressures on the host governments to concede to demands frequently leads to alterations in government policies against national interests. By threatening to withdraw or withhold, the multinational is able to pose a threat of mass unemployment and many long term implications which the host government would find difficult to counter. Adverse publicity which disinvestment negotiations may generate can complicate the issue by discouraging other foreign companies to fill the vacuum left by such voluntary disinvestment.

Similar action by the host government in creating involuntary disinvestment by nationalisation and similar measures, may also be responsible for misconceptions between the host nations and the multinationals. However, the impact of involuntary disinvestment may not have so pro- found an effect on these relationships as in the case of voluntary disinvestment. In this respect the arguments put forward by the host governments as revealed in interviews during this study, indicate that over the years multinational corporations have strengthened their positions on a world- wide basis. This increases their capability to off-set the effects of involuntary disinvestment by mobilizing and transferring their resources wherever and whenever they wish.

As already mentioned, those countries which have launched their development plans, and are therefore reliant on outside assistance for their completion, are most vulnerable to the effects of disinvestment. They find themselves in a dilemma. The present governments of such nations fear that if the existing trend of foreign disinvestment becomes a permanent feature and they are unable to attract new foreign investors, their internal political position could well be weakened. Foreign disinvestment on a wide scale could bring about social upheavals, and put the national economy into disarray. In these situations the host nation may feel held to ransom by the multinational corporations. For example, consider the case of British gross investment and disinvestment from Sri Lanka, Pakistan and India as shown in Tables 1 and 2.

Table 1 Gross British Foreign Investment

1968 1969 1970 1971 1972 1973 £ million

India 16.8 14.6 17.4 13.9 15.8 18.4 Sri Lanka 2.6 1.6 1.3 1.7 4.3 1.4 Pakistan 4.7 2.6 3.0 2.7

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Table 2 British Foreign Disinvestment

1968 1969 1970 1971 1972 1973 £ million

India 7.7 5.2 7.1 5.1 11.5 7.9 Sri Lanka 1.9 1.4 1.6 1.6 4.6 2.0 Pakistan 0.6 0.8 1.7 3.0

The statistics on gross foreign investment may not as such represent a serious situation, but when disinvestment is taken into consideration, an entirely different picture emerges. For in- stance, the disinvestment gap (gross investment - net investment) has in the case of Pakistan widened since 1968 (Figure 3). The British multinationals withdrew their wide ranging interests from Pakistan to such an extent that in 1971 the net British investment became negative. This happened during a period when the Pakistan government was overtly following a policy of seeking to attract foreign investment from all quarters. The percentage of disinvestment to gross investment increased from 13 in 1968 to 1 1 1 in 1971 , thereby upsetting most of the national plans (Figure 6). The industries most affected were chemicals and engineering which were already ex- periencing a recession due to lack of capital and technical know-how. In 1973 a further set back was caused by disinvestment, not only on the part of the British multinationals, but by the actions of companies of other countries who consolidated their operations in the neighbouring countries of the Middle East.

Figure 3 Investment by British Multinationals


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The same situation of negative net British investment was faced by Sri Lanka, from 1970 on- wards (Figure 4). During this period, the government of Sri Lanka embarked upon ambitious plans for development and industrialisation which included major reforms of the wage structure of foreign company employees. As a result of government pressures the multinationals reacted sharply effecting mass disinvestment. In the case of British multinationals the percentage of disinvestment to gross investment rose from 73 in 1968 to 143 in 1973.

In the case of India although British gross investment tended to stagnate during this same period, disinvestment activities did not worsen, except for the year 1972. However, almost 40 per cent of the gross investment was disinvested from various operations (Figures 5 and 6). Some of these operations were stopped altogether, whilst in others the British stake was reduced. Such a state of affairs both in India and other countries depicts a gloomy picture. This is not only true of British multinationals but American, German and others, who are rationalising their operations on a world- wide basis.

The arguments presented in the preceding sections will, it is hoped, give some idea of the seri- ousness of the problems of disinvestment as applicable to the relationships of multinational corporations and host governments. In the past this problem has not been faced on so wide a scale. This issue is proving to be a major cause of strained relationships, not merely between multinationals and host governments, but it is also jeopardizing the internal relations of home and host governments. Understandably, the effects of such strained relationships also involve international organisations such as the United Nations, Organisation for Economic Co-operation and Development, European Common Market etc. The situation may become worse if the unilat- eral attitudes of both multinational corporations and host governments continue on their sepa- rate paths.

These doubts have been expressed by the corporate management as well as the host government officials who participated in this study. On questioning the course of action to be taken, it was categorically stated that despite great efforts over the years to integrate one another's interests,


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Figure 6 Percentage of Disinvestment to Gross Investment by British Multinationals

there still remained a gap in direct communication on such matters as foreign disinvestment. Be- fore attempts to integrate disinvestment interests are made, it is essential to bridge this gap by establishing tripartite links for frank and direct consultation. These are links between corporate management, the host and home governments. Instead of working towards mutual interest, and sharing confidence, in the present climate it would appear that the three parties involved are drifting further apart on the issue of disinvestment.

Normally the present communication link (where it exists) on the issue of disinvestment between the corporate management and the host government is channelled through the local subsidiary in the host country. Whatever information appertaining to disinvestment is dissemi- nated, is diffused, distorted, or received too late. Distorted or 'angled' communications are frequently the biased views of the management of local subsidiaries, who tend to put their personal and local interests first. Thus disinvestment decisions can be delayed and facts hidden. Lack of interest on the part of home governments has often been criticised by management and host governments. Home governments are invariably accused by their multinational corporations of not providing adequate protection in the event of involuntary disinvestment. Also host governments often blame the home government for shirking its responsibilities in the case of voluntary disinvestment. In failing to take adequate interest in the problems of disinvestment, the home nations are therefore open to question.

The facts which have emerged during investigations on this subject confirm the need to establish direct links of bilateral communication between corporate policy making and national policy making centres. Such links should be used for consultation, as a media for transferring information and for maintainance of confidentiality, often necessary for a final decision. This suggested link-up is represented in Figure 7.

Briefly, the system would operate in the following way. In planning for voluntary disinvestment the corporate management first contacts the host government and advises of the difficulties being faced in a particular operation, which may lead eventually to disinvestment. The manage-

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Figure 7 Communication Link-up between Multinationals, Host and Home Nations.

ment also warns the host government of various implications, which may include financial, social or technological problems. Simultaneously the corporate management, for the same reasons, informs the home government of its intentions, and invites advice and government assistance in the implementation of overseas policies. The establishment of a tripartite forum af- fords equal opportunities for mutually satisfactory decisions, each party having some responsibility for the outcome. This same process in the event of involuntary disinvestment, can also be initiated by the host government.

The role of the international organisations as intermediaries, at the central pivot, is three-fold.

a. For the elimination of any existing bias due to the common interests of the home nation and its multinational corporations.

b. For providing alternative source of communication in situations where, perhaps through disagreement there is a blockage in the direct channels. For the purpose of maintaining confidentiality, the alternate source can also be used for forming initial contacts.

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c. As most of the host and home nations will be members of these international organisations, their goodwill can be helpful, where a dispute exists.

The above communication framework is suggested as a means of establishing normality in a situation of strained relations between multinational corporations, home and host governments, in the matter of disinvestment disputes. It can, however, be used equally effectively in other deli- cate matters, which may also demand a degree of confidentiality at the negotiating stage. Such arrangements between various policy-making centres may already exist but for a number of reasons may not be put into effective and adequate use. In such cases the resuscitation of existing communication channels could well bring about a better understanding and interface reaction between the management and host government. Their very survival and the direction of their future evolution is greatly dependent upon the state of their relationships.

Within the same framework of interface, it may be worth briefly considering 'planned' disinvestment as a means of dilution of ownership and control of existing foreign investment and as a built-in policy for future arrangements.

Planned Disinvestment as a Policy of Dilution

The recent policies of certain host nations in acquiring majority control over ownership and management control of foreign operations have given rise to criticisms in many quarters. Policies of dilution which lead to the final transfer of ownership and management control to local citizens, are based usually on one main objective. The majority of the host governments, which have in recent times followed such policies, hold the viewpoint that allowing control of operations to lie exclusively in the hands of multinational companies as opposed to indigenous management, creates obstacles in the accomplishment of their national objective. These obstacles include the necessity to co-ordinate policies throughout the economy, lack of control over repatriation of profits and transfer of technology. Similar reasoning is put forward by the multinational companies for the retention of majority, or absolute control of their own operations in the host country.

Some host nations, mainly those which are at the 'taking-off stage of development, are not in- frequently parties to disputation in the matter of control and ownership. They have been able to accomplish certain short-term favourable results by following policies of localisation (involuntary dilution), but a backlash is created due to:

(i) The decrease in the inflow of new foreign resources in terms of capital and technical know-how causes delays in the completion of existing development projects and post- ponement in the commissioning of future projects.

(ii) With the decrease in inflow of new foreign resources, the outflow of existing capital has steadily increased. This hampers the development in a more direct way than the former case.

Another area of conflict is caused by the host government's policy of dilution, for example, over the arrangements by which disinvestment of ownership and control are undertaken. To bring the foreign holding to the level required by the host government, should the existing equity be sold, or should new stock be issued in favour of locals ? Other factors, such as the sale price of the stock, the timing of the sale, and the availability of a suitable buyer may also be crucial. On the dilution itself, as the terms and conditions are mainly dictated by the host government's policy, the corporate management is afforded scant choice of manoeuvrability.

Considering the policy of dilution from the multinational corporation point of view, the management invariably argues that the host government always wishes to acquire a majority holding

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in operations which are profitable and growth bound. In the case of less attractive or loss making operations, the host government is not interested in the implementation of its own policies of dilution, but at the same time, it prevents management from undertaking disinvestment measures on its own initiative. This creates a more complex situation in relationships.

Planned Disinvestment as a Built-in Policy

The basis of this policy in the form of joint ventures and other arrangements has been on trial for a considerable time. The outcome of such trials has proved to be of limited use. In many situations, the transfer of advanced technology, new capital for future expansion, and lack of feasible arrangements for continuity following complete transfer, are said to be main hindrances in such arrangements. On the part of the host government this gives rise to desirability at the outset for the gradual transfer of these, in accordance with a fixed schedule. The underlying reasoning is more or less the same as for the policy of dilution of existing operations with one significant dif- ference:

In the case of a built-in policy on disinvestment on a planned basis, the terms and conditions are, in principle, generally discussed and agreed upon at the outset. In situations where disagreement exists both parties have at least an equal opportunity of seeking their interest else- where. Depending upon whether the company is already operating in a particular host country, any disagreement under this policy will be less conducive to conflict than in the case of a policy of dilution.

Disinvestment Agency

The setting up of a disinvestment agency for co-ordinating disinvestment activities and providing information necessary to the tripartite communication system, is considered of importance by the host governments, and the multinational corporations. Such an agency could operate in collaboration with all parties involved in the disinvestment process, concentrating particularly on two main areas:

First, given the necessary trust by its members, it may act as an arbitrator in cases of disagreement and dispute over sale price, compensation, repatriation of disinvestment proceeds, and means of implementing the policies of dilution and built-in disinvestment.

Secondly, it can be used as a source for the provision of funds, both in the cases of voluntary and involuntary disinvestment. It can also provide funds on behalf of the host government or other buyer when the management fails to find a buyer with sufficient financial resources. In the situation of involuntary disinvestment, the agency may also be able to assist the host government fi- nancially in paying compensation and other such exigencies. Further it can, also in extreme cases, act as a buyer where no other purchaser is forthcoming and until such time as a suitable buyer comes forward.

Two major obstacles are visualised in the establishment and financing of such an agency. To ensure smooth running and efficient operations, all three parties - the multinational corporations, the host government and the home government should be participants. This will also ensure that the disinvestment process is a joint responsibility. The latter fund raising operation can be a more difficult venture. Ideally, funds should be contributed by all three parties. As they all be- nefited from the same investment venture they should take joint responsibility for the disinvestment implications. Whatever may be the final arrangements for setting up such an agency, further research is required.

The desirability, primarily on the part of host nations rather than the multinationals, of planned dilution, and built-in disinvestment, demands some institutional changes in the basic concept of

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foreign investment. More essentially, the issues of control and the objective of the host government need to be clarified. The difficulty of effecting such changes in concept may possibly be the reason for slow progress to date in this direction. The study strongly indicates that some progress is necessary for creating of normality in the multinational corporation-host government interface.

Summary

The main force of the argument described in the preceding sections can be summarized as fol- lows:

The subject of foreign disinvestment is a complicated socio-economic process. It involves an in- tricate structure of attitudes, opinions, relationships, at both national and international levels, and the manner in which such attitudes, opinions and relationships are changing. It also em- braces differing elements of individual and organizational behaviour; is often inhibited by the need for secrecy; influenced by past events; and requires a great measure of foresight. Some institutional changes may be considered vital today, and even more so in the future. The points submitted in this paper hopefully give an insight into foreign disinvestment- a crucial matter in the context of foreign investment. Additional research needs to be undertaken in this virgin area of primary importance. It may be the source of some satisfaction to realize that this subject has already aroused some interest within international business research centres. Some of the more promising avenues of research are suggested below:

a. In-depth case studies analysing the dynamics of foreign disinvestment in various industry groups.

b. The need for institutional changes in the basic concept of foreign investment from the point of view of disinvestment as a policy of dilution and as a built-in policy.

c. The possibility of establishing a disinvestment agency.

d. Alternative arrangements for the continuity of operations after complete disinvestment, such as management contracts etc.

e. Roles of existing international organizations such as the U. N., World Bank, O. E. C. D. in disinvestment situations.

f . Disinvestment as a potential bargaining tool during negotiations between multinationals and host governments.

References

1 Vernon, Raymond, The Economy and Political Consequences of Multinational Enterprise: Ah Antholo- gy, Harvard Business School, Boston, 1972; and Sovereignty at Bay: The Multinational Spread ofU. S. Enterprises, Longmans, London, 1971.

2 Behrman, Jack N., U. S. International Business and Governments, McGraw-Hill, New York, 1971; National Interests and the Multinational Enterprise: Tensions Among North Atlantic Countries, Pren- tice-Hall, Englewood Cliffs, N. J. 1970; and Some Patterns in the Rise of the Multinational Enterprise, University of North Carolina Press, Chapel Hill, 1969.

3 Fayerweather, John F. , International Business-Government Affairs: Toward an Era of Accommodation Ballinger Publishing Company, Cambridge, 1973.

4 Boddewyn, J. J., 'Co-author', International Business-Government Relations: A Study ofU. S. Corpo- rate Experience. The American Management Association, 1973.

5 Kapoor, Ashok, Planning for International Business Negotiations, Ballinger Publishing Company, Cambridge, 1975, and International Business Negotiations: A Study in India, New York University Press, 1970.

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6 Brooke, Michael Z. and Remmers, H. Lee, The Strategy of Multinational Enterprise, Longmans, 1970. 7 Torneden, Roger L., Foreign Disinvestment by U. S. Multinational Corporations, Praeger Publishers,

New York, 1975. Also see, co-authored with J. J. Boddewyn, "U. S. Foreign Disinvestment: A Pre- liminary Survey'*, and "Foreign Disinvestment: Too Many Mistakes", Columbia Journal of World Bus- iness, Summer 1973: pp. 25-29 and Fall 1974: pp. 87-94 respectively.

8 Gilmour, Stuart Clark, 'The Divestment Decision Process', Ph. D. Dissertation, Harvard University, 1973.

9 Truitt, J. F., Expropriation of Private Foreign Investment, Graduate School of Business, Indiana Uni- versity, 1974.

10 Hayes, Robert H., "New Emphasis on Divestment Opportunities", Harvard Business Review July- August 1972: pp. 55-64; and "Optimal Strategies for Divestiture", Operations Research , March- April 1969: pp. 292-309.

11 Davies, James V., "The Strategic Divestment Process" Long Range Planning, February 1974: pp. 15-18.

12 Wallender, Harvey W., "A Planned Approach to Divestment" Columbia Journal of World Business, Spring 1973: pp. 33-37.

13 Moose, Sandra and Zakon, Alan J., "Cleaning Up Your Corporate Portfolio", European Business, Au- tumn 1971: pp. 19-26.

14 Loveioy, F. A., Disinvestment for Profit, Financial Executive Research Foundation, 1973. 15 Hirschman, Albert O., "How to Divest in Latin America, and Why", The Multinational Enterprise in

Transition, Ed. Ashok Kapoor and Phillip D. Grub, The Darwin Press, Princeton, New Jersey 1971 : Chapter 32.

16 Prebisch, Raul, "The Role of Foreign Private Investment in the Development of Latin America", Sixth Annual Meeting of the IA-ECOSOC, June 1969, OEA/Ser. H/X14, and "La Marcha de la Integra- cion", Boletin de la Integracion, INTAL, March 1970.

17 Behrman, Jack N., "International Divestment: Panacea or Pitfall?" Looking Ahead, November-De- cember 1970: pp. 1-12.

18 Sachdev, Jagdish C, "Disinvestment: A Corporate Failure or Strategic Success". Paper presented at the conference of the Academy of International Business, INSEAD, Fontainebleau, July 1975.

19 Sachdev, Jagdish C, "British Private Disinvestment in India and the Neighbouring Contnes", Indian Administrative & Management Review, July-September 1974: pp. 36-38.

20 Rose, Sanford, "Multinational Corporations in Tough World", Fortune, August 1973 : pp. 52-57. 21 Wooster, John J. and Thoman, G. R., "New Financial Priorities for MNCs , Harvard Business Re-

view, May- June 1974; pp. 52-59. 22 Herschman, Arlene, "The Age of Un-merger", Dun's Review, June, 1970: pp. 30-33 ; Thackray, John,

"Disinvestment: How to Shrink and Profit", European Business, Spring 1971: pp. 50-57; Hayes, R. H., "New Emphasis on Divestment Opportunities", Harvard Business Review, July- August 1972:

pp. 55-64, and Franco, L. G. , "Joint Venture Divorce in the Multinational Company", Columbia Jour- nal of World Business, May-June 1971 .

23 Torneden, Roger L., Foreign Disinvestment by U. S. Multinational Corporations, Praeger Publishers, New York 1975.

24 Data has been compiled by monitoring various business journals, press and companies annual reports. It is being updated regularly.

25 Woodroofe, G. Ernest., "The Social Role of the World Enterprise", The McKinsey Quarterly, Winter 1974.

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