Patia McGrath, University of North Carolina, and Shiva Agarwal, University of Texas
Abstract: This research investigates capability development at the business unit level of analysis. To do so, we consider business units that have been serially bought and sold, or “repeatedly divested” units. Business units may acquire first-hand divestiture experience through earlier divestitures, prior to their acquisition by their current parent. This experience may lead to unit-level learning that can fuel a business unit’s ability to successfully navigate the divestiture process, and thus hone what may be referred to as a “divestiture capability.” Business unit divestiture capability holds the potential for performance benefits for the unit — and for its acquiring parent.