Building on the literature on performance feedback that emphasizes aspiration levels as an important reference point, we shift the focus to the role of survival points. We argue that corporate parents may change subsidiary survival points in response to environmental changes. More specifically, we predict that a financial crisis in a parent’s home country elevates survival points of subsidiaries in host countries, increasing the probability of subsidiary exit. We further investigate how the effect of parent crisis on subsidiary exit is moderated by factors that influence the extent of survival point adjustments, including the use of parent-specific resources by the subsidiary and the efficiency of a subsidiary’s local market. We test our predictions with panel data on 3,378 foreign subsidiaries of multinational retailers across 157 host countries over 13 years. Our study contributes to the literature by illuminating the dynamics of survival points, which can change over time in response to changes in firms’ external environments even when those changes do not directly affect a focal subsidiary, providing an improved understanding of the direct and contextual drivers of divestiture decisions.
