The influence of liability of foreignness on market entry strategies: An illustration of market entry in China
Abstract
Purpose
The purpose of this study is to examine how liability of foreignness (LOF) influences multinational enterprises (MNEs) market entry strategy.
Design/methodology/approach
Building on the extant literature, this paper examines the influence of LOF on four MNE market entry strategies (i.e. market‐seeking, resource‐seeking, competitive advantage and control‐orientation) in a sample of 3,085 Sino‐foreign joint ventures formed in manufacturing sectors in China.
Findings
The findings indicate that LOF influences market entry strategies selected by MNEs. Specifically, MNEs from low LOF countries adopt resource‐seeking strategies and strategies to utilize their competitive advantages in labor‐intensive industries more than MNEs from high LOF countries, while investors from high LOF countries adopt market‐seeking and control‐oriented strategies to a greater degree than MNEs from low LOF countries.
Originality/value
This study provides new theoretical insights into LOF for academics as well as suggests the need for managers to explicitly incorporate LOF into market entry strategy decisions.
Keywords
Citation
Chen, H., Griffith, D.A. and Hu, M.Y. (2006), "The influence of liability of foreignness on market entry strategies: An illustration of market entry in China", International Marketing Review, Vol. 23 No. 6, pp. 636-649. https://doi.org/10.1108/02651330610712148
Publisher
:Emerald Group Publishing Limited
Copyright © 2006, Emerald Group Publishing Limited