Causes of the Difficulties in Internationalization
Journal of International Business Studies, Vol. 38, No. 5, pp. 709-725, 2007
22 Pages Posted: 6 Dec 2007
We study the causes of the difficulties faced by firms when they internationalize in search of new markets. We build on the resource-based theory to argue that the difficulties in internationalization can be separated into three main sets based on their relationship to advantage: loss of an advantage of resources transferred abroad, creation of a disadvantage by resources transferred abroad, or lack of complementary resources required to operate abroad. In each set, we further distinguish difficulties that are specific to a firm from those that are common to a set of firms. We argue that only few of the resulting types of difficulties of internationalization are exclusive to the cross-border expansion, and propose solutions that address the root cause of each type.
Keywords: cost of doing business abroad, liability of foreignness, internationalization, multinational enterprises, resource-based theory
JEL Classification: F23
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