The two important environmental trends that influence a firm's choice and use of international corporate-level strategies are Liability of foreignness and regionalization.
What is liability of foreignness?
- The costs of doing business abroad (CDBA) is a well-known term in international business literature that measures the disadvantages or additional expenses faced by multinational businesses (MNEs) that local firms in a host country do not bear.
- International management experts have recently introduced a new notion, liability of foreignness (LOF).
- As indicated by a recent special issue on liability of foreignness, there is uncertainty in the two literatures regarding the link between CBDA and LOF (Journal of International Management, 2002).
- We contend that LOF emphasizes the social costs of doing business overseas, whereas CDBA takes into account both economic and social expenses.
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