Growth strategies have long been a priority for executive leadership. However, growth can also create problems. Leaders may need to use restructuring and divestiture actions to regain control, improve transparency, and re-establish efficiency. Given that leaders benefit from having insights into the antecedents, processes, outcomes, and decisions associated with unwinding growth most effectively, it is essential to consider the body of knowledge that exists in strategic management on restructuring and divestiture. This review seeks to describe what is currently known and not known about restructuring and divestiture and will give future researchers some suggested directions for further developing knowledge about these expensive and risky actions. The assessment is organized round five key questions that have shaped the field’s literature base: Why do firms divest? How do firms divest? Do divestitures create value? What happens to the divested units? And what are some promising directions for future knowledge development? Afterwards, three challenges for knowledge development are presented: What is value creation and for whom does it matter? What to do about incomplete information? And, is there a need for integrating different levels of strategy? Overall, it is important to identify, develop, and analyze the conceptual models of restructuring and divestiture with the purpose of guiding future research to provide knowledge that decision-makers will find useful as they engage in restructuring and divestitures.
Donald D. Bergh
Jill E. Hopke and Luis E. Hestres
Divestment is a socially responsible investing tactic to remove assets from a sector or industry based on moral objections to its business practices. It has historical roots in the anti-apartheid movement in South Africa. The early-21st-century fossil fuel divestment movement began with climate activist and 350.org co-founder Bill McKibben’s Rolling Stone article, “Global Warming’s Terrifying New Math.” McKibben’s argument centers on three numbers. The first is 2°C, the international target for limiting global warming that was agreed upon at the United Nations Framework Convention on Climate Change 2009 Copenhagen conference of parties (COP). The second is 565 Gigatons, the estimated upper limit of carbon dioxide that the world population can put into the atmosphere and reasonably expect to stay below 2°C. The third number is 2,795 Gigatons, which is the amount of proven fossil fuel reserves. That the amount of proven reserves is five times that which is allowable within the 2°C limit forms the basis for calls to divest. The aggregation of individual divestment campaigns constitutes a movement with shared goals. Divestment can also function as “tactic” to indirectly apply pressure to targets of a movement, such as in the case of the movement to stop the Dakota Access Pipeline in the United States. Since 2012, the fossil fuel divestment movement has been gaining traction, first in the United States and United Kingdom, with student-led organizing focused on pressuring universities to divest endowment assets on moral grounds. In partnership with 350.org, The Guardian launched its Keep it in the Ground campaign in March 2015 at the behest of outgoing editor-in-chief Alan Rusbridger. Within its first year, the digital campaign garnered support from more than a quarter-million online petitioners and won a “campaign of the year” award in the Press Gazette’s British Journalism Awards. Since the launch of The Guardian’s campaign, “keep it in the ground” has become a dominant frame used by fossil fuel divestment activists. Divestment campaigns seek to stigmatize the fossil fuel industry. The rationale for divestment rests on the idea that fossil fuel companies are financially valued based on their resource reserves and will not be able to extract these reserves with a 2°C or lower climate target. Thus, their valuation will be reduced and the financial holdings become “stranded assets.” Critics of divestment have cited the costs and risks to institutional endowments that divestment would entail, arguing that to divest would go against their fiduciary responsibility. Critics have also argued that divesting from fossil fuel assets would have little or no impact on the industry. Some higher education institutions, including Princeton and Harvard, have objected to divestment as a politicization of their endowments. Divestment advocates have responded to this concern by pointing out that not divesting is not a politically neutral act—it is, in fact, choosing the side of fossil fuel corporations.
Luis E. Hestres and Jill E. Hopke
The past two decades have transformed how interest groups, social movement organizations, and individuals engage in collective action. Meanwhile, the climate change advocacy landscape, previously dominated by well-established environmental organizations, now accommodates new ones focused exclusively on this issue. What binds these closely related trends is the rapid diffusion of communication technologies like the internet and portable devices such as smartphones and tablets. Before the diffusion of digital and mobile technologies, collective action, whether channeled through interest groups or social movement organizations, consisted of amassing and expending resources—money, staff, time, etc.—on behalf of a cause via top-down organizations. These resource expenditures often took the form of elite persuasion: media outreach, policy and scientific expertise, legal action, and lobbying. But broad diffusion of digital technologies has enabled alternatives to this model to flourish. In some cases, digital communication technologies have simply made the collective action process faster and more cost-effective for organizations; in other cases, these same technologies now allow individuals to eschew traditional advocacy groups and instead rely on digital platforms to self-organize. New political organizations have also emerged whose scope and influence would not be possible without digital technologies. Journalism has also felt the impact of technological diffusion. Within networked environments, digital news platforms are reconfiguring traditional news production, giving rise to new paradigms of journalism. At the same time, climate change and related issues are increasingly becoming the backdrop to news stories on topics as varied as politics and international relations, science and the environment, economics and inequality, and popular culture. Digital communication technologies have significantly reduced the barriers for collective action—a trend that in many cases has meant a reduced role for traditional brick-and-mortar advocacy organizations and their preferred strategies. This trend is already changing the types of advocacy efforts that reach decision-makers, which may help determine the policies that they are willing to consider and adopt on a range of issues—including climate change. In short, widespread adoption of digital media has fueled broad changes in both collective action and climate change advocacy. Examples of advocacy organizations and campaigns that embody this trend include 350.org, the Climate Reality Project, and the Guardian’s “Keep It in the Ground” campaign. 350.org was co-founded in 2007 by environmentalist and author Bill McKibben and several of his former students from Middlebury College in Vermont. The Climate Reality project was founded under another name by former U.S. Vice President and Nobel Prize winner Al Gore. The Guardian’s “Keep It in the Ground” fossil fuel divestment campaign, which is a partnership with 350.org and its Go Fossil Free Campaign, was launched in March 2015 at the behest of outgoing editor-in-chief Alan Rusbridger.
David L. Hostetter
American activists who challenged South African apartheid during the Cold War era extended their opposition to racial discrimination in the United States into world politics. US antiapartheid organizations worked in solidarity with forces struggling against the racist regime in South Africa and played a significant role in the global antiapartheid movement. More than four decades of organizing preceded the legislative showdown of 1986, when a bipartisan coalition in Congress overrode President Ronald Reagan’s veto, to enact economic sanctions against the apartheid regime in South Africa. Adoption of sanctions by the United States, along with transnational solidarity with the resistance to apartheid by South Africans, helped prompt the apartheid regime to relinquish power and allow the democratic elections that brought Nelson Mandela and the African National Congress to power in 1994. Drawing on the tactics, strategies and moral authority of the civil rights movement, antiapartheid campaigners mobilized public opinion while increasing African American influence in the formulation of US foreign policy. Long-lasting organizations such as the American Committee on Africa and TransAfrica called for boycotts and divestment while lobbying for economic sanctions. Utilizing tactics such as rallies, demonstrations, and nonviolent civil disobedience actions, antiapartheid activists made their voices heard on college campuses, corporate boardrooms, municipal and state governments, as well as the halls of Congress. Cultural expressions of criticism and resistance served to reinforce public sentiment against apartheid. Novels, plays, movies, and music provided a way for Americans to connect to the struggles of those suffering under apartheid. By extending the moral logic of the movement for African American civil rights, American anti-apartheid activists created a multicultural coalition that brought about institutional and governmental divestment from apartheid, prompted Congress to impose economic sanctions on South Africa, and increased the influence of African Americans regarding issues of race and American foreign policy.
Mainline Protestant denominations in the United States have a history of using divestment as an economic form of nonviolent moral activism. While such activism can have a domestic focus, at times church divestment efforts have emphasized foreign policy issues as an extension of church activism in the areas of social justice and moral reform. Churches have used economic activism such as divestment from apartheid South Africa and investment screens to prevent church pension and other funds from being used for products and services—such as alcohol, tobacco and munitions—deemed “immoral” by church bodies. The case of the Israeli-Palestinian conflict illustrates the broader themes and tensions involved in church divestment debates, given the media coverage that has been generated by the topic due to the special relationship between Christians and the holy land and the troubled history of Christianity and anti-Semitism. Some Protestant denominations, particularly those with a history of engagement in Israel/Palestine, have responded to the Palestinians’ call for boycott, divestment, and sanctions (BDS) to advance their freedom and human rights. However, such responses have not been immune from debate and controversy. Some mainline Protestant denominations, including the Presbyterian Church USA (PCUSA), the United Methodist Church, and the Episcopal Church have debated resolutions dealing with church divestment from companies profiting from Israel’s occupation of Palestinian territories. Such resolutions have resulted in pushback from some parties, including efforts to criminalize boycott of Israel.