Overcoming the liability of foreignness – A new perspective on Chinese MNCs

Mingchun Cao, Ilan Alon

Research output: Contribution to journalArticlepeer-review

29 Scopus citations

Abstract

We maintain that previous research on multinational corporations' liability of foreignness has underemphasized the importance of the firm's dependence on their parents, subsidiary and local resources. To address this issue, we conducted 43 semi-structured interviews with expatriate and local managers of Chinese high-tech MNCs over two years (2017–2019) and across China, Poland and Hong Kong to understand how they cope with the liability of foreignness in Poland. Using the resource dependence perspective, the linkage, leverage, learning (LLL) paradigm and the institutional view, we identified six dimensions affecting the liability of foreignness: resource commitment, information flow, resource control, resource integration, local responsiveness and flexibility of control. We found that the subsidiaries of Chinese MNCs developed a mutual dependence with headquarters and local stakeholders, and adapted to the host country by using expatriates and local employees as mechanisms for resource transfer. We propose a holistic overview of the liability of foreignness using a Chinese multinational perspective.

Original languageEnglish
Pages (from-to)611-626
Number of pages16
JournalJournal of Business Research
Volume128
DOIs
StatePublished - May 2021
Externally publishedYes

Keywords

  • Chinese MNCs
  • Liability of foreignness
  • Resource dependence theory
  • Subsidiary

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