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Overcoming Liability of Foreignness: An Analysis of Early Foreign Investment in China

Overcoming Liability of Foreignness: An Analysis of Early Foreign Investment in China

Haiyang Chen, Michael Y. Hu, G. Peter Zhang
Copyright: © 2010 |Volume: 1 |Issue: 3 |Pages: 13
ISSN: 1947-8569|EISSN: 1947-8577|EISBN13: 9781609609849|DOI: 10.4018/jsds.2010070105
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MLA

Chen, Haiyang, et al. "Overcoming Liability of Foreignness: An Analysis of Early Foreign Investment in China." IJSDS vol.1, no.3 2010: pp.71-83. http://doi.org/10.4018/jsds.2010070105

APA

Chen, H., Hu, M. Y., & Zhang, G. P. (2010). Overcoming Liability of Foreignness: An Analysis of Early Foreign Investment in China. International Journal of Strategic Decision Sciences (IJSDS), 1(3), 71-83. http://doi.org/10.4018/jsds.2010070105

Chicago

Chen, Haiyang, Michael Y. Hu, and G. Peter Zhang. "Overcoming Liability of Foreignness: An Analysis of Early Foreign Investment in China," International Journal of Strategic Decision Sciences (IJSDS) 1, no.3: 71-83. http://doi.org/10.4018/jsds.2010070105

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Abstract

This study examines the liability of foreignness (LOF) faced by multinational enterprises (MNEs), and the effects of strategies employed to overcome the liability. Based on a sample of 3,085 Sino-foreign joint ventures formed in manufacturing sectors in China, the authors find that Hong Kong investors, who are often perceived to have lower LOF than investors from other countries, are more actively engaged in strategies to overcome the LOF. Specifically, Hong Kong investors actively adopt strategies to seek local markets, maintain investment flexibility, utilize their competitive advantages in labor-intensive industries, and leverage cooperative synergism to improve their performance. Investors from other countries adopt market seeking and cooperative synergy approach to improve performance.

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