The Role of Rivals in the Foreign Divestments of International Healthcare Systems

Abstract

This study bridges the research gap between oligopolistic reaction and foreign divestment strategy. Based on a 40 year dataset that captured the divestment decisions of the largest American international healthcare systems operating foreign hospitals, the relationship between the number of rivals operating in a focal country and the number of previous rival divestments is analyzed on healthcare system divestment and market exit timing. The findings suggest that in the same host country a focal healthcare system’s decision to divest is positively related to both the number of rivals and their previous divestment decisions of their competitors. In the timing of the decisions, the more rivals operating in a host country, the faster the divestment decisions are. The divestment decisions of rivals, however, decelerated the decisions of focal hospitals to divest. Support exists for oligopolistic reaction in foreign divestments.