چگونه شرکت های چند ملیتی با محیط کسب و کار بین المللی تعامل برقرار می کنند؟

An expanded and holistic conceptualization of the liability of foreignness (LOF) is presented that goes beyond the traditional foreign subsidiary–local firm dyad in the host country. Taking the strategy process perspective, we contend that this liability is the aggregated effect of the firm's interaction with all elements of the international business environment (IBE), not merely in the initial entry mode decisions but throughout its foreign operations. Viewing the antecedents and consequences of this liability holistically, we argue that accurate reading of the complex and volatile IBE, formulation of a compatible strategy and its effective implementation together contribute to good performance. As the resource-based perspective suggests the degree to which firms develop such tacit skills, differentially affects their performance. Firms that excel in these environment-reading skills and are agile enough to quickly adapt to its changes can transform this liability into a competitive advantage.

Forty years after the path-breaking contribution by Hymer (1960), the notion of liability of foreignness (LOF), though widely acknowledged in scholarly works, still eludes precise theoretical delineation. The fact that a firm, accustomed to functioning in its home country environment, incurs costs and disadvantages on venturing abroad can easily be appreciated. Several studies have explored the nature and effect of many of those disadvantages, be they on account of cultural differences, host government policies, political risk or other similar factors. Such attempts, however, represent only isolated snapshots of the phenomenon and have failed to view this liability holistically. Most research has conceived LOF in the constricted dyad of foreign subsidiary–local firm operations. Traditionally, all disadvantages incurred by the former in the host country's environment have been loosely clubbed under this “umbrella” term. The traditional conceptualization presents a somewhat static and constricted view that is unable to explain all the costs of doing business abroad incurred by multinational enterprises (MNEs), either on an enduring basis or in the context of multicountry operations. Consequently, this narrow focus on only some restricted elements rather than upon a fully delineated whole does not allow a proper perspective of the phenomenon. The costs arising out of unfamiliarity and discrimination in the host country's environment are not the only costs incurred by an MNE once it ventures abroad. Interaction with the extreme complexity and volatility of the international business environment (IBE) itself imposes many other costs upon MNEs. Such costs arise not only out of reading the IBE incorrectly but also from not formulating and implementing a strategy that is compatible with it. Moreover, these costs are incurred not merely at the time of the initial entry into a foreign market but can persist throughout the duration of the firm's foreign operations. This paper uses the term reading colloquially to include scanning, interpretation, synthesis and analysis. There is ample evidence of such costs, both empirical and anecdotal. Some recent studies, going beyond the traditional dyads, have presented evidence at the macro level, contending that diversification and globalization cause a reduction in firm value Denis et al., 2000 and Mason and Moore, 1999. Click and Harrison (2000), for instance, followed the financial performance of over 3000 US firms over a 14-year period to provide empirical evidence that an increase in the extent of multinational operations of US corporations actually brought about erosion in their value. Their arguments, however, are based only on an accounting and economics-based perspective and do not take into account the strategic compulsions due to which MNEs might often be constrained to accept such costs in order to follow their rivals into foreign markets due to oligopolistic rivalry. The financial issue of firm value thus cannot be divorced from the strategic issue of foreign market entry. This paper seeks to examine LOF through the relatively underexplored lens of strategic management, departing from the usual transaction-cost economics perspective, because it enables a more realistic and continuous appraisal of the effect of the IBE on MNE operations. Anecdotal evidence also abounds about such costs, with even established MNEs often incurring huge losses in their foreign operations. Ricks (1993) and Knight (1995), for instance, provide lucid accounts of blunders in international business. However, do those anecdotes really reinforce the LOF argument? Or, alternatively, are they getting confounded with mistakes that even domestic firms could make in their strategy formulation or operations? It could, however, be argued that if the firm's operations were to remain confined to the domestic arena, it would not get exposed to the extreme complexity and volatility of the IBE, which increases the likelihood of strategic mistakes. The degree of difficulty of operations in the IBE increases exponentially, requiring more sophisticated techniques of reading the environment, relative to domestic firms. However, as we demonstrate later, the increased propensity for mistakes is not merely due to the erroneous reading of the IBE. The failure to formulate a strategy that is compatible with the prevailing IBE further accentuates it, and the problem is compounded even more if implementation itself is flawed. Moreover, all these steps have to remain in sync throughout the duration of its foreign operations or else performance would suffer. Undoubtedly, this requirement exists even for domestic firms. However, for MNEs, strategy formulation and implementation demand much higher dimensions of stringency due to the extreme complexity, volatility and interdependence of the IBE. There is a need, therefore, to distinguish LOF (in the traditional dyadic sense) from a so-called liability of foreign operations, which simply are all the costs of doing business abroad. While the former is due to spatial distance, unfamiliarity with the environment and discrimination suffered by the subsidiary in the host country, the latter comprehensively includes all costs incurred by any domestic firm from the moment it undertakes cross-border operations. However, do we need two terms that make the foregoing distinction or would an expanded conceptualization of the existing term LOF suffice? This paper recommends the latter alternative. A moot question, however, arises: If multinational operations incur such liabilities, then why should MNEs still be investing abroad in droves? For instance, while the 20-year period from 1960 to 1980 saw a trebling of aggregate FDI, it jumped from $500 bn to over $3000 bn during 1980–1996, a more than sixfold increase in the next 16 years (UNCTAD, 1997). U.S. FDI itself increased from $60 bn in 1967 to $ 860 bn in 1997. The phenomenal growth in size and numbers of MNEs bears eloquent testimony to our argument that despite the LOF, firms can and indeed do overcome these disadvantages. In fact, the leading players, by developing appropriate intrafirm processes and skills, often convert this liability into a relative competitive advantage. This paper, therefore, covers two aspects. It first presents a generic and enhanced conceptualization of the notion of LOF. We argue that LOF is the aggregated effect of the firm's interaction with all elements of the IBE. Firms incur this liability only as a consequence of their decision to operate abroad, which forces them to interact with the IBE. The second aspect, which is the main theme of this paper, seeks to examine the entire process holistically and focuses upon the antecedents and consequences of this liability. The nature of the IBE (hostile or otherwise), the firm's reading it comprehensively and accurately, the formulation of a strategy that is appropriate for that environment and the adaptation of the firm's internal processes to ensure effective implementation of that strategy all form an integrated process. Inaccuracies in any of those steps contribute to that liability. Drawing from the resource-based perspective, the paper contends that MNEs can be differentiated on the basis of the degree to which they have developed intrafirm skills and processes for an accurate reading of the IBE and then formulating and implementing a strategy that is always compatible with it. The study then provides an illustrative listing of work in existing literature, both strategy and international business, which has dealt with individual facets of the integrated IBE reading, strategy formulation and implementation process. The paper thus seeks to make a contribution both to theory and to practice by providing an enhanced conceptualization of LOF as a metaconstruct and highlighting that firms can, not merely mitigate LOF, but even turn it to a competitive advantage by developing those skills and processes that keep their strategy in sync with the IBE, better than rivals.

The LOF arises primarily due to the MNE's interaction with the IBE, something that domestic firms are not confronted with. Scholars, presumably, had not previously attempted a holistic model of that interaction because individual components of the IBE itself had not been identified comprehensively. This paper has presented an integrated model of the entire MNE–IBE interaction process, which includes strategy formulation and its implementation as well, though the latter two aspects also apply to domestic firms. However, as we have argued, the complexity, volatility and interdependence of various elements of the IBE is far greater in magnitude than anything that even the largest domestic firm would ever have to encounter. This makes it imperative that environment reading, strategy formulation and implementation processes be viewed as an integrated whole in the context of MNEs. The model envisions all informational inputs from the IBE being systematically and comprehensively screened through any environment-analyzing analytical tool, such as the geovalent filter and then collated, interpreted, synthesized with all other information and analyzed. Such environmentally sensitized information would enable formulation of a strategy that is better compatible with the IBE. More importantly, the dynamic monitoring of the IBE enables reappraisal of MNE strategy, on an ongoing basis, in tandem with environmental changes. The alacrity of the firm in detecting those changes and its agility in adapting its internal procedures to quickly modify its strategy ensure that it is rarely out of sync with the environment. MNEs that consistently excel in these tacit skills embedded in their personnel and internal routines would enjoy a competitive advantage over their rivals. This integrated model should open up promising areas for further research in terms of operationalization and measurement of various elements of the LOF construct and assessing their impact on MNE performance. It would also be very useful for practice, as it enables MNE managers to better understand the intricacies of the IBE in order to devise appropriate intrafirm skills to deal with it.