The Liabilities of Origin: An Emerging Economy Perspective on the Costs of Doing Business Abroad

ADVANCES IN INTERNATIONAL MANAGEMENT: THE PAST, PRESENT AND FUTURE OF INTERNATIONAL BUSINESS AND MANAGEMENT, Devinney, TM, Pedersen, T & L Tihanyi, eds., Vol. 23, New York, NY: Emerald, 2010

58 Pages Posted: 30 Apr 2010

See all articles by J. Ramachandran

J. Ramachandran

Indian Institute of Management Bangalore

Anirvan Pant

Indian Institute of Management Bangalore

Date Written: March 3, 2010

Abstract

We contend that the concept of liability of foreignness is inadequate to describe the set of disadvantages faced by emerging economy MNEs in international markets. In order to address this theoretical gap, we develop the concept of ‘liabilities of origin’ (LOR). We propose that the concept of LOR explains how the national origins of the MNE shape its disadvantages in international markets through three distinctive contexts of the MNE’s ongoing activity: the home country context, the host country context and the organizational context. We argue that in order to understand how emerging economy MNEs overcome their LOR, we need to engage simultaneously with the theoretical perspectives provided by the institutional entrepreneurship and organizational identity literatures. We suggest, further, that the concept of LOR may be useful to understand the character of MNE disadvantage in any international foray where the national origins of the MNE engender legitimacy-based and capability-based disadvantages for the MNE in a host country.

Keywords: costs of doing business abroad, emerging economy MNEs, liability of foreignness, liabilities of origin, organizational legitimacy, organizational identity

Suggested Citation

Ramachandran, J. and Pant, Anirvan, The Liabilities of Origin: An Emerging Economy Perspective on the Costs of Doing Business Abroad (March 3, 2010). ADVANCES IN INTERNATIONAL MANAGEMENT: THE PAST, PRESENT AND FUTURE OF INTERNATIONAL BUSINESS AND MANAGEMENT, Devinney, TM, Pedersen, T & L Tihanyi, eds., Vol. 23, New York, NY: Emerald, 2010, Available at SSRN: https://ssrn.com/abstract=1596813

J. Ramachandran

Indian Institute of Management Bangalore ( email )

Bannerghatta Road
Bangalore, Karnataka 560076
India

Anirvan Pant (Contact Author)

Indian Institute of Management Bangalore ( email )

Bannerghatta Road
Bangalore, 560076
India

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
778
Abstract Views
3,702
Rank
61,348
PlumX Metrics