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Regional Dimensions of Liability of Foreignness: Between a Rock and a Hard Place?

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  • Wolfgang Sofka

    ()

    (Centre for European Economic Research (ZEW), Mannheim, Germany)

  • Joerg Zimmermann

    (Max Planck Institute of Economics, Jena, Germany)

Abstract

In this paper we develop optimized localization strategies for multinational firms to overcome their liability of foreignness by adding a regional dimension. We explore conceptually whether economic stress in a region has a mitigating or reinforcing effect. We test this analytical framework empirically on the highly internationalized German car market and find that economically depressed regions are promising stepping stones into foreign markets.

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Paper provided by Friedrich-Schiller-University Jena in its series Jena Economic Research Papers with number 2007-023.

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Date of creation: 25 Jun 2007
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Handle: RePEc:jrp:jrpwrp:2007-023
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Keywords: Liability of foreignness; multinational strategy; automotive market;

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Find related papers by JEL classification:
  • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
  • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
  • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General

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