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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.

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.

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 literature on foreignness has, to date, stressed the liability of foreignness (LOF) and the advantage of foreignness (AOF). Drawing on industrial organisation theory, institutional theory, the resource-based view of the firm and the literature on networking, the authors’ research develops an integrated framework to explore the impact of foreignness on internationalisation depth from the perspective of the duality of foreignness (LOF versus AOF) within multiple dimensions. These dimensions are isomorphism, home country of origin, institutional distance and dual embeddedness of multinational enterprises (MNEs).

In this study, the authors empirically test hypotheses arising from this new theoretical framework by examining the characteristics of a sample of 324 Chinese MNEs (CMNEs) that were operating in 63 countries from 1999 to 2018. Employing regression analysis on a panel of 9,410 observations, the results show that foreignness does exhibit multilevel complexity and duality.

The authors’ empirical results show that isomorphism pressures, country of origin and institutional distance have a negative effect on internationalisation depth (as an outcome of LOF) but that dual embeddedness, on the part of MNEs, exerts a positive impact on internationalisation depth (as an outcome of AOF). The implications for research on multilevel complexity and the duality of foreignness are discussed, and managerial implications are outlined.

The implications of the authors’ findings for MNEs should not be generalised to developed countries without examining the characteristics of both China as an emerging country and its MNEs. The second limit is regarding ownership; this framework has limitations due to choosing China and its OFDIs for testing internationalisation depth. Finally, for subsequent research, examining the dynamics of foreignness completes the nature of multicomplexity, defined by external and internal factors of foreignness changing over time and space.

CMNE managers are advised to actively scrutinise their behaviours in the local country to overcome the differences in routines, values and practices inherent in local institutions (Chen et al., 2019). The results imply that CMNEs should be careful not to overuse their home country image when penetrating a new market. Thus, a strategy to reduce a home government's hegemonic or otherwise negative image may be wise when operating abroad. Finally, the authors’ model suggests that CMNEs equipped with great RCN CIPs for identifying, scanning and interpreting local institutions can enhance internationalisation depth.

The authors’ research contributes to research on foreignness by emphasising foreignness as a construct of multilevel complexity. The authors argue that foreignness arises due to varying factors at the host, home, host-home levels and at the level of the organisational entity. The authors’ definition of foreignness and empirical results supports the notion that isomorphism pressures (host country-level factors), country-of-origin of home country (home country-level factors) and institutional distance (host-home country-level factors) are inextricably negatively linked with internationalisation depth (as effects of LOF). By contrast, the dual embeddedness of MNEs (the factor of organisational level) represents a positive relationship with internationalisation depth (as effects of AOF).

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 costs of doing business abroad (CDBA) is a well-known concept in the international business literature, measuring the disadvantages or additional costs borne by multinational enterprises (MNEs) that are not borne by local firms in a host country. Recently, international management scholars have introduced a second concept, liability of foreignness (LOF). There is confusion in the two literatures as to the relationship between CBDA and LOF, as evidenced in a recent special issue on liability of foreignness (Journal of International Management, 2002). We argue that LOF stresses the social costs of doing business abroad, whereas CDBA includes both economic and social costs. The social costs arise from the unfamiliarity, relational, and discriminatory hazards that foreign firms face over and above those faced by local firms in the host country. Because the economic costs are well understood and can be anticipated, LOF becomes the core strategic issue for MNE managers. We argue that the key driver behind LOF is the institutional distance (cognitive, normative, and regulatory) between the home and host countries, and explore the ways in which institutional distance can affect LOF. We operationalize our arguments by showing how institutional distance and liability of foreignness can provide an alternative explanation for the MNE’s ownership strategy when going abroad.

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.

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.

Setting the multinational enterprise (MNE) apart on the basis of a weakly specified idea of foreignness may impede progress in international business (IB). The discipline lacks a paradigm to assimilate the idea of foreignness as an incident of internationality, a global condition describing the political context within which the MNE functions and which confers uniqueness on that institution. However, a plausible re-imagining of the MNE is possible and useful, and here a candidate for such an ontological shift is proffered. Rather than a firm struggling in one or more foreign contexts, the MNE is reconstructed as a foreigner contending with the responsibilities of a firm. The proposed re-imagining of the MNE is experimentally substituted for the received ontology in different IB research contexts. It transpires that this ontological revision maintains intelligibility in those contexts while usefully exposing new directions in which to pursue knowledge. In consequence of re-imagining the MNE, that institution may be situated more precisely amid the international system’s primal constituents, and links may be more effectively established with other bodies of research addressing the functioning of the international political economic system.

Immigrant groups often pursue entrepreneurial endeavors in their new home country. Even though both immigrant entrepreneurship and organizational identity have received scholarly attention, there has been little systematic exploration of identity strategies pursued by immigrant-owned organizations. In this article, we develop a theoretical framework that draws on the concepts of liability of foreignness and social identity theory in the context of immigrant entrepreneurship. Our framework explores how immigrant entrepreneurs may negotiate identities for their firms through the development of specific identity strategies that confirm or underplay their national/ethnic identities in order to survive in their immediate environment. We develop a model that shows how these confirmations or underplaying strategies work both for firms that have an individualistic entrepreneurial orientation, as well as those with a collective/associative entrepreneurial orientation. We also suggest two contextual moderators to this relationship: (1) the image of the founder's country of origin, and (2) the presence of immigrant networks in the host country, which may alter the effectiveness of identity strategies in terms of organizational mortality outcomes.