This study proposes an information-processing-based view of a multinational firm’s portfolio restructuring initiatives. We emphasize the tension between the benefits of multinationality for firms and the resulting complexity when managing such a firm. Specifically, we suggest that reductions (increases) in political uncertainty on the subsidiary portfolio level decrease (increase) the information-processing demand while altering or limiting a firm’s possibility to capitalize on its multinationality. We expect reductions and increases in political uncertainty to lead to higher restructuring intensity as multinational firms use both as strategic tools to adjust their portfolio. We further expect complexity to constrain this undertaking. However, while we find support for our main hypothesis, the results show that complexity strengthens the positive relationship between reductions in political uncertainty and restructuring intensity. Interestingly, complexity weakens (or nullifies) the positive relationship between higher political uncertainty and divestment intensity. This suggests that complexity is a critical factor that leads to heterogeneous restructuring implementations. We will discuss the theoretical implications of our findings.
