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Overcoming the Liability of Foreignness

Published on Apr 1, 1995in Academy of Management Journal
· DOI :10.5465/256683
Srilata Zaheer27
Estimated H-index: 27
(UMN: University of Minnesota)
Abstract
This study addressed the question of whether firms in a competitive, globally integrated environment face a “liability of foreignness” and to what extent either importing home-country organizational capabilities or copying the practices of successful local firms can help them overcome this liability. Predictions were tested with a paired sample of 24 foreign exchange trading rooms of major Western and Japanese banks in New York and Tokyo. Results support the existence of a liability of foreignness and the role of a firm's administrative heritage in providing competitive advantage to its multinational subunits. They also highlight the difficulty firms face in copying organizational practices from other firms.
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