Strategies to avoid liability of foreignness when entering a new market

Haritz Gorostidi‐Martinez · Xiaokang Zhao

25 citations0/0 files storedJournal of Advances in Management Research

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International Business and FDI International Student and Expatriate Challenges Global and Cross-Cultural Management

Abstract

Purpose The purpose of this paper is to investigate the liability of foreignness (LOF) concept when entering a new market. Drawing on the past literature, the current research provides a summary of issues of the main LOF that companies face, as well as suggestions to help avoid such burdens. The research also attempts to provide a bibliographic analysis of the topic. Design/methodology/approach Articles were collected from All Database of ISI Web of Knowledge, using “all years,” “social science,” and “business economics” as search terms. Relevant papers on the LOF topic were retrieved and sorted to identify the main issues. Furthermore, a bibliographic analysis of the LOF concept was elaborated. HistCite software was used to create a table and a graph for the most relevant papers. A summary of issues on LOF strategies was created along with guidance for companies entering a new market. Findings The study sorts strategies to avoid LOF, including operational capabilities, entry modes, country of origin, legitimacy achievement, risk of politico-economic changes, and location selection. The study identified strategies for small- and medium-sized businesses (SMEs) entering emerging and transitional economies, as well as suggestions when entering sophisticated economies. Practical implications The current data summary informs managers from diverse organizations who attempt to enter a new market with particular sociopolitical contexts. Originality/value A summary of issues on LOF and suggestions for overcoming these problems to help companies enter new markets have not been available. The current study attempts to fill that void, providing suggestions to managers and business owners who have moved or expanded their businesses to a foreign country or contemplate an international move.

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References

2009The Uppsala internationalization process model revisited: From liability of foreignness to liability of outsidership 1995OVERCOMING THE LIABILITY OF FOREIGNNESS.1999Organizational Legitimacy Under Conditions of Complexity: The Case of the Multinational Enterprise 2001The internationalization and performance of SMEs 1997THE DYNAMICS OF THE LIABILITY OF FOREIGNNESS: A GLOBAL STUDY OF SURVIVAL IN FINANCIAL SERVICES 2008Do managerial ties in China always produce value? Competition, uncertainty, and domestic vs. foreign firms 2011Multinationals and Corporate Social Responsibility in Host Countries: Does Distance Matter?2004When Mickey Loses Face: Recontextualization, Semantic Fit, and the Semiotics of Foreignness

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