Author： Chen Haiyang Griffith David A. Hu Michael Y.
Publisher： Emerald Group Publishing Ltd
ISSN： 0265-1335
Source： International Marketing Review, Vol.23, Iss.6, 2006-11, pp. : 636-649
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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.
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