Liability of foreignness to competitive advantage: An empirical study of multinational enterprise strategies for negotiating the international business environment.

摘要

This dissertation extends the research into the ever-increasing complexity and kaleidoscopic nature of the international business environment on account of which firms incur a liability once they venture abroad. It however presents an expanded and holistic conceptualization of the liability of foreignness, moving beyond its traditional connotation as a foreign subsidiary-local firm dyad in the host country's environment. Taking the strategy process perspective, it is contended that this liability is the aggregated effect of the firm's interaction with all elements of the international business environment, not merely in the initial entry mode decisions, but throughout its foreign operations. Further, viewing the antecedents and consequences of this liability holistically, it is argued that an accurate reading of the international business environment, and formulation of a compatible strategy and its effective implementation, together contribute to good performance. As the resource-based perspective suggests, the degree to which firms develop such tacit skills would differentially affect their performance. Firms that excel in these environment ‘reading’ skills and which are agile enough to quickly adapt to its changes, can turn this liability into a competitive advantage.; The dissertation is organized as a trilogy of three independently publishable papers comprising theory, qualitative and quantitative pieces respectively, which investigate different but nonetheless inter-related facets of the international business environment. Using a grounded theory approach, through interviews and questionnaires administered to top and middle level managers in multinational firms of varying sizes, several propositions are developed about those intra-firm processes and skills that enable firms to better ‘read’ and adapt to the rapidly changing international business environment. Since the state of the international business environment is often accurately mirrored by foreign direct investment trends, US direct investments into Western Europe and Asia are empirically analyzed over the 20-year period 1981–2000. An oligopolistic rivalry-cum-economic liberalization based rationale is provided to explain why those investments have been migrating to developing countries.; The dissertation thus provides a promising avenue for further research into the complex realm of the international business environment, which has high potential significance for academic scholars as well as for managements of multinational enterprises.