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The dialectics of liabilities of foreignness (LOF) and assets of foreignness (AOF) have led to further explorations of what it means for an organisation to be foreign. This paper reviews, synthesises and contextualises recent research on both the challenges and benefits of foreignness, to develop a balanced and integrated view of this international business concept.

This review aims at mapping the key concepts, theories, methods and contexts in the literature and organising the key findings in an antecedent-outcomes-strategy framework, explicitly comparing LOF and AOF to explore their interrelationships. Drawing on a sample of 126 journal articles, NVivo was used to code and identify key thematic areas.

The review confirms a shift in the literature towards acknowledging the notion of AOF. Using different theoretical lenses, it identifies, reviews and discusses antecedents, consequences and strategy implications of LOF and AOF. It argues that foreignness will continue to be a fundamental concept in international business research and suggests that AOF and LOF deserve an equally central place in an integrated analytical framework of foreignness in international business strategy.

The paper is the first systematic attempt to integrate the literature on LOF and AOF. The systematic comparison across drivers, outcomes and strategies allows for a better understanding of the advantages and disadvantages of foreignness and the underlying phenomenon of foreignness. The authors also explore the paradox perspective on foreignness.

The purpose of this paper is to present our viewpoint on the research on foreignness and provide directions for future studies. We suggest that research on foreignness can be expanded by exploring its complexity.

This article takes the form of a viewpoint.

We identify three facets of foreignness – foreignness effect (liabilities or assets) foreignness level (organizational or individual) and foreignness locus (external or internal to an entity), which have not been sufficiently examined in prior research.

We discuss how these aspects can inform a novel research agenda in this area.

Answering to calls for further contextualizing global leadership, this study investigates power dynamics and cultural identities in global leadership in an African context. We took a grounded theory approach to investigate how a specific cultural context shapes assets and liabilities of global leaders. Drawing on our data comprising semi-structured interviews of managers of multinational enterprises operating in Ghana, we identified key assets and liabilities for being local or foreign in one’s global leadership role. Furthermore, we theorize four specific styles of leadership leveraging: identity leveraging, power leveraging, juxtapositional leveraging, and temporal leveraging. Finally, we integrated the above-mentioned elements and proposed a framework of contextualized assets and liabilities which illustrates how specific cultural context affects the assets and liabilities of localness and foreignness for global leaders, and how these assets and liabilities constitute the four styles of leveraging in such context. Implications of our findings for research and practice are discussed.

This chapter discusses how firms can accrue unique advantages from their foreign status in the host country, with a particular focus on informal networks. Drawing on the literature on the liability and asset of foreignness, this chapter argues that foreign firms can be in a better position to balance between the bright and dark side of informal networks than local firms. Foreign firms can deviate from local isomorphic pressures to minimize potential involvement in negative sides. Moreover, they can build more instrumental informal networks in which the dark side of informal networking is better controlled and regulated without losing social cohesion, flexibility, and other benefits of the bright side. This chapter contributes to our understanding of how foreign firms can turn foreignness into assets from liabilities when managing their informal networks in the host country.

The liability of foreignness has long been acknowledged as a key concept in international business research. Departing from the cost side of foreignness, this chapter explores intangible benefits of foreignness exclusive to multinational enterprises in a host country in addition to tangible benefits such as preferential tax policies. Intangible benefits of foreignness are defined as advantages of foreignness so as to distinguish from assets of foreignness – tangible benefits of foreignness. Drawing on institutional theory and social comparison theory, we propose that advantages of foreignness can lead to important firm-specific performance-related outcomes, which have been generally underestimated in the international business literature.

Foreign subsidiaries incur substantial institutional conformity costs because they have to respond to host-country institutional pressures (Slangen & Hennart, 2008). The purpose of this paper is to study this type of cost from institutional and regulatory perspectives. The authors argue that these costs decrease when the host country adopts concepts of international regulations that multinationals may be familiar with due to their own home country regulation experience. This prior regulatory experience gives foreign subsidiaries an advantage of foreignness (AoF), which can offset their liability of foreignness (LoF).

This study compared the returns on assets of 35 domestic firms with those of foreign subsidiaries in the Brazilian energy industry between 2002 and 2021, using regression dynamic panel data.

The existence of a relationship between the international regulatory norm and the Brazilian regulator has transformed the LoF into an advantage of foreignness to compete with local energy firms. The results also suggest that the better the regulatory quality of the subsidiary’s country of origin, the better its performance in Brazil, as it can reduce compliance costs. Finally, the greater the psychic distance between Brazil and the foreign subsidiary’s home country, the worse its performance.

The research suggests that one of the keys to competitiveness in host countries is local regulatory ties. Prior international regulatory experience gives foreign subsidiaries an asset of foreignness (AoF). This result complements the current institutional and regulatory foreignness studies on emerging economies (Cuervo-Cazurra & Genc, 2008; Mallon et al., 2022) and the institutional asymmetry between home and host country (Mallon & Fainshmidt, 2017).

This research suggests that one of the keys to competitiveness in host countries is local regulatory ties. Prior international regulatory experience gives foreign subsidiaries an asset of foreignness (AoF). This result complements the current institutional and regulatory foreignness studies on emerging economies (Cuervo-Cazurra & Genc, 2008; Mallon et al., 2022) and the institutional asymmetry between home and host country (Mallon & Fainshmidt, 2017). The practical implication is that the relationship between conformity costs, capital budget calculation and strategic planning for internationalization will be related to the governance quality of the home country of multinationals. The social implication is that a country interested in attracting more direct foreign investment to areas that need foreign technology transfer and resources may consider adopting international regulatory standards.

The social implication is that a country interested in attracting more direct foreign investment to areas that need foreign technology transfer and resources may consider adopting international regulatory standards.

This research discuss firm and local regulator tie is one of core competitiveness in host countries (Yang and Meyer, 2020). This study also complements the current institutional and regulatory foreignness studies in emerging economy (Cuervo-Cazurra & Genc, 2008; Mallon et al., 2022). Second, prior regulatory experience of multinational enterprise in similar environment can affect its foreign affiliate performance (Perkins, 2014). Third, this study confirms current literature that argues that knowledge and ability to operate in an institutionalized country can be transferred from parent to affiliate. In the end, this study investigates whether AoF persists when host governments improve the governance of their industries.

The purpose of this paper is to explore the simultaneous evolution of LOF and AOF in the context of environmental protection (EP) companies from Europe in the Chinese market.

The authors adopt a qualitative, case study approach, using interview data to explore the extent of liability of foreignness and how the FSAs of firms have changed from the time on market entry. The authors undertook 15 in-depth interviews with decision makers in six companies addressing their experience of foreignness during their long tenure in China. To control for sector-level effects, the authors focus on companies in the EP sector.

The authors found the evolving AOF of the firms were challenged to a significant extent that caused difficulties in reducing their LOF over time. The EP sector is dominated by state-owned enterprises that have unique organized structure preventing localized foreign firms from gaining access into the institutionalized network. This deeply quilted institutionalized network had a corrosive effect in the gradual erosion of the LOF manifested from unfair price strategy practice, forced collaborations, ostracization of project participations, operational barriers, prohibited and restricted market access. The research also uncovered the rebirth nature of LOF that caused AOF to lose its significance across bureaucracy and ownership changed.

The relatively small number of cases (six) limits the generalizability of the findings by the authors. However, the authors are convinced that, given that the case companies are generally large and have long experience in China, the conclusions made are well grounded. In addition, there was the high level of coherence in the reported experiences of the interviewees, providing further support for the findings.

The experiences of these case study companies highlight that MNEs need to be vigilant and creative in constantly improving their FSAs so that the competitive distance between them and the local competitors remains substantial.

Very few studies have explored both assets and liabilities of foreignness in the host country regulatory context using a case study-based qualitative approach, especially in emerging markets.

This paper challenges the assumption in cross-cultural research of liability of foreignness (LOF). The literature review demonstrates that LOF comes from pressures for isomorphism, while asset of foreignness (AOF) can derive from the active process of breaking norms. The purpose of this paper is to explore how leaders can initiate and sustain AOF.

The paper analyzes the case of the Nissan revival led by Carlos Ghosn and the impact in the years after. The analysis is based on the authors’ interviews and discussions with Ghosn and senior leaders at Nissan and Renault, complemented with published interviews and assessments.

Analysis confirmed the potential for AOF, and further uncovered four patterns of behavior that created AOF virtuous cycles among Nissan leaders: initiating trust, shaping identity, anchoring and transcending common language, and acting positively on ignorance. The virtuous cycles were sustainable and transformed into new global strategic perspectives.

The paper proposes a research model identifying moderators between foreignness and performance. Generalizability is limited by the focus on a single case study.

The four sets of behaviors can serve as guides to action for leaders when working in foreign contexts.

This research goes beneath the surface of a famous example to analyze leadership dynamics over time, and provides insight on positive aspects of foreignness.

In an increasingly competitive global market, firms try to conquer a special place in customers’ minds and – when possible – in their hearts and spirits in order to succeed. Hence, through a competitive strategy based on differentiation, companies tend to focus their efforts in creating the right value proposition for consumers. They also establish upstream and/or downstream partnerships based on win–win relationships for the parties that constitute their value chain. The particular characteristics of ethnic products influence these strategies and the brand crossover. How can the ethnic-national identity of a product be employed successfully – regarding its liabilities and assets – in international sales? This case study¹ focuses on Nata Pura, a rather young Portuguese firm that has built its internationalization strategy based on exporting a traditional product pastel de nata using innovative solutions, which include the development of partnerships to produce and promote this as an organic pastry made with high-quality-adapted ingredients. Earlier, the traditional product was mainly sold and distributed within Portuguese Diaspora. Nata Pura company markets and distributes the re-invented product, originally a traditional Portuguese food product, and bridges cultural and administrative distances by combining the traditional with global tendencies and tastes.

Recent empirical findings on the relationship between internationalization and firm performance (I–P) suggest a significant role of firm's context. Extending this line of argument, the authors study the effect of internationalization on firm's performance for emerging market firms from knowledge-intensive industries, taking into account the firm's motive of internationalization and host country’s location-based advantages.

The authors link host country-specific advantages (CSAs) with firm-specific advantages (FSAs) to identify three distinct settings of internationalization for emerging economy firms – (1) asset-exploitative internationalization in developing or least developed countries, (2) asset-exploitative internationalization in developed countries and (3) strategic asset-seeking internationalization. The authors test this study’s hypotheses on a sample of 415 Indian firms from knowledge-intensive industries.

The authors find that firm's performance upon internationalization is non-linear in each of the three different settings. The nature of the non-linear relationship depends upon location-based advantages of the host country and the motive of internationalization.

The motive of internationalization and the location-based advantages sought during internationalization are unique for emerging economy firms. Hence, the study extends understanding of the I–P linkage in an emerging economy context.