How Foreignness can be an Asset and a Liability for Firms

Jörg Zimmermann, Wolfgang Sofka

    Research output: Chapter in Book/Report/Conference proceedingConference abstract in proceedingsResearchpeer-review


    Many modern firms compete globally. However, research is inconclusive on whether foreignness provides an asset or a liability in competition with domestic firms. We argue that foreign MNC subsidiaries are not per se advantaged or disadvantaged. We suggest that the distinction originates from the nature of the subsidiary’s activity in the host country. We focus on two activities: knowledge search and deployment. We predict theoretically that domestic firms have advantages from their embeddedness in the host country when they search for knowledge. However, foreign MNC subsidiaries have advantages in knowledge deployment because they draw from a richer, international knowledge pool. Still, these advantages accrue to all multinational firms, foreign and domestic. We test and support these predictions for a longitudinal dataset of 2900 firm observations in Spain. We develop recommendations for research and practice based on these findings.
    Original languageEnglish
    Title of host publicationProceedings of the 56th Annual Meeting of the Academy of International Business : Local Contexts in Global Business
    EditorsKlaus Meyer, Tunga Kiyak
    Place of PublicationEast Lansing, MI
    PublisherAcademy of International Business
    Publication date2014
    Publication statusPublished - 2014
    EventAIB 2014 Annual Meeting : Local Context in Global Business - Westin Bayshore, Vancouver, Canada
    Duration: 23 Jun 201426 Jun 2014
    Conference number: 56


    ConferenceAIB 2014 Annual Meeting
    LocationWestin Bayshore
    Internet address
    SeriesAcademy of International Business. Annual Meeting. Proceedings

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