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Exploiting the liability of foreignness: Why do service firms exploit foreign affiliate networks at home?

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  • Boehe, Dirk Michael

Abstract

Drawing on both a resource-based view of the firm and an in-depth case study, we develop a novel conceptual model that explains under what conditions a service firm may use its international affiliate network to build a differentiation-based competitive advantage in its domestic market. The bank we studied implemented a differentiation strategy by positioning itself as a "South American Bank" and by offering a set of foreign trade services to its domestic clients that were unique at the time of their introduction. Our conceptual model fills a gap in the literature on difficulties in internationalization by explaining under what conditions internationalizing firms may opt for a strategy that seeks to domestically exploit resources and capabilities that have been developed in the course of internationalization.

Suggested Citation

  • Boehe, Dirk Michael, 2011. "Exploiting the liability of foreignness: Why do service firms exploit foreign affiliate networks at home?," Journal of International Management, Elsevier, vol. 17(1), pages 15-29, March.
  • Handle: RePEc:eee:intman:v:17:y:2011:i:1:p:15-29
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    Cited by:

    1. Carrère, Céline & Fugazza, Marco & Olarreaga, Marcelo & Robert-Nicoud, Frédéric, 2016. "On the heterogeneous effect of trade on unemployment," CEPR Discussion Papers 11540, C.E.P.R. Discussion Papers.
    2. Denk, Nikola & Kaufmann, Lutz & Roesch, Jan-Frederik, 2012. "Liabilities of Foreignness Revisited: A Review of Contemporary Studies and Recommendations for Future Research," Journal of International Management, Elsevier, vol. 18(4), pages 322-334.
    3. Newburry, William & Gardberg, Naomi A. & Sanchez, Juan I., 2014. "Employer Attractiveness in Latin America: The Association Among Foreignness, Internationalization and Talent Recruitment," Journal of International Management, Elsevier, vol. 20(3), pages 327-344.
    4. Reddy, Kotapati Srinivasa, 2016. "Institutional Voids and Tax litigation in Emerging Economies: The verdict of Vodafone cross-border acquisition of Hutchison," MPRA Paper 74264, University Library of Munich, Germany, revised 2016.
    5. Reddy, Kotapati Srinivasa, 2015. "The State of Case Study Research in Mergers & Acquisitions: A Review of the Literature in Different Management Streams," MPRA Paper 63939, University Library of Munich, Germany, revised 2015.

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