1. The liability of foreignness reconsidered: New insights from the alternative research context of transforming economies A B S T R A C T:
Institutional theory has been increasingly used to decipher implications of the liability of
being a foreign firm. Earlier studies have argued that multinational corporations bear
social costs arising from lack of legitimacy and thus need to engage in isomorphism to
increase their likelihood of survival. Drawing on insights gained from transforming
economies, this study reconsiders the espoused relationships among legitimacy, local
isomorphism, and overcoming the liability of foreignness. We argue that idiosyncrasies of
transforming economies could engender (1) varying levels of need for gaining legitimacy
of local constituents and (2) alternative ways other than local isomorphism for gaining
legitimacy from local institutional actors.
2. The Uppsala internationalization process model revisited: From liability of foreignness to liability of outsidership
Abstract
The Uppsala internationalization process model is revisited in the light of
changes in business practices and theoretical advances that have been made
since 1977. Now the business environment is viewed as a web of relationships,
a network, rather than as a neoclassical market with many independent
suppliers and customers. Outsidership, in relation to the relevant network,
more than psychic distance, is the root of uncertainty. The change mechanisms
in the revised model are essentially the same as those in the original version,
although we add trust-building and knowledge creation, the latter to recognize
the fact that new knowledge is developed in relationships.
3. Parent company benefits from reverse knowledge transfer: The role of the liability of newness in MNEs
Abstract:
Research on reverse knowledge transfer (RKT) has relegated subsidiary age to a control variable.
However, to the extent that subsidiary age captures experience with host countries and internal
networks, it reflects accumulated knowledge stocks and capabilities. We draw on organizational ecology
theory to theorize that subsidiary age is an important determinant of parent company benefits from RKT
and that RKT from older subsidiaries is viewed as more beneficial to the parent company than RKT from
younger subsidiaries. This relationship is negatively moderated by the use of acquisitions and majorityowned
joint ventures, and positively moderated by the use of socialization mechanisms.
4. Exploiting the liability of foreignness: Why do service firms exploit foreign affiliate networks at home?
Abstract:
Drawing on both a resource-based view of the firm and an in-depth case study, we develop a
novel conceptual model that explains under what conditions a service firm may use its
international affiliate network to build a differentiation-based competitive advantage in its
domestic market. The bank we studied implemented a differentiation strategy by positioning
itself as a “South American Bank” and by offering a set of foreign trade services to its domestic
clients that were unique at the time of their introduction. Our conceptual model fills a gap in
the literature on difficulties in internationalization by explaining under what conditions
internationalizing firms may opt for a strategy that seeks to domestically exploit resources and
capabilities that have been developed in the course of internationalization.
5. Liability of Outsidership