Do foreign firms operating in China incur a liability of foreignness? Local firms' perspective

Jiang, Fuming, Liu, Lixian, and Stening, Bruce W. (2014) Do foreign firms operating in China incur a liability of foreignness? Local firms' perspective. Thunderbird International Business Review, 56 (6). pp. 501-518.

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Liability of foreignness (LOF) has been one of the building blocks of multinational enterprise theory development, but we have limited knowledge about the liability of foreignness in the context of multinationals operating in developing countries. This study suggests that in a developing country like China, foreignness may still exist, but its negative impact on foreign firms' performance may have become insignificant. Local Chinese firms were found to enjoy significant location-based advantages over their foreign counterparts, contributing to liability of foreignness. However, the adverse effects of liability of foreignness on foreign firms appear to be offset by the foreign firms' superior firm-specific and multinationality advantages over local Chinese firms. Further, the location-based advantages that foreign firms have built up over time further serve to strengthen their overall competitive position in China.

Item ID: 52969
Item Type: Article (Research - C1)
ISSN: 1520-6874
Date Deposited: 06 Apr 2018 01:50
FoR Codes: 15 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 1503 Business and Management > 150308 International Business @ 100%
SEO Codes: 91 ECONOMIC FRAMEWORK > 9104 Management and Productivity > 910402 Management @ 100%
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