Liability of foreignness to competitive advantage

Overcoming the liability of foreignness without strong firm capabilities — the value of market-based resources

“…In addition, Calhoun (2002) identifies a cultural dimension to the liability of foreignness; Sethi and Guisinger (2002) put forth a lack of understanding of the general business environment of the host country; and Mezias (2002a,b) elaborates on the disadvantages presented by regulatory requirements in a foreign host country. Eden and Molot (2002) argue that, in an era of increased globalization, the legitimacy of a firm in a given country may matter more than its home country identity: they document that the early MNC entrants into the Canadian auto subsidiary had greater legitimacy than the late entrants -and used that legitimacy to keep other foreign competitors at bay.…”

Liability of Foreignness in Fast‐Expanding Markets: Evidence from Ghana

“…However, since 1960, empirical evidence in the international business literature has shown that there is a liability of foreignness (LOF) that investors face in host markets (Hymer, ; Teagarden, ). Several reasons have been adduced for this problem (see Calhoun, ; Mezias, ; Sethi & Guisinger, ) and with it their corresponding remedies (Mezias, ; Petersen & Pedersen, ; Zaheer, ). However, the main reason that has been adduced for this problem is contextual differences between home and host markets (Calhoun, ; Hymer, ; Teagarden, ).…”

“…The study contributes to the international business literature by testing an old concept in a new unit of analysis (FEMs). Also, the study is one of the earliest to provide a conceptualization of liability beyond the performance variation between local and foreign firms (Petersen & Pedersen, ; Sethi & Guisinger, ; Zaheer, ; Zaheer & Mosakowski, ) crime within the society. This is particularly important when we consider that Hymer's initial conceptualization was based on discrimination from the general society.…”

Does Perception of Business Climate Differ Between Foreign and Local Investors? A Firm-level Study of Transition Economies in Eastern Europe and Central Asia

“…Some scholars have argued that the profit-related incentives for investors do not generally work unless they are appropriately combined with other incentives to improve the general investment climate (Athukorala, 2009). A similar logic is articulated in LoF literature (Sethi and Guisinger, 2002) where it is argued that a foreign firm operating in a foreign country with the inherent disadvantages relative to local firms will take a proactive role to adjust to the local business environment.…”