Liability of country foreignness and liability of regional foreignness: Their effects on geographic diversification and firm performance

Gongming Qian, Lee Li and Alan Rugman
Additional contact information
Gongming Qian: Department of Management, Faculty of Business Administration, The Chinese University of Hong Kong
Lee Li: York University, Toronto, Ontario, Canada

Journal of International Business Studies, 2013, vol. 44, issue 6, 635-647

Abstract: The costs of inter- and intra-regional diversification have been widely discussed in the existing international business literature, but the findings are mixed. Explanations for the mixed findings have important managerial implications, because business managers have to estimate accurately the costs of doing business within and across regions before they make their internationalization decisions. To explain the existing mixed findings, this study differentiates between liabilities of foreignness at the country and regional levels, and explores the joint effects of liability of country foreignness (LCF) and liability of regional foreignness (LRF) on the performance of internationalizing firms. Using data from 167 Canadian firms, we find that LCF may not necessarily be negatively correlated with intra-regional diversification, but LRF is positively correlated with inter-regional diversification. LCF moderates the relationship between LRF and inter-regional diversification, and also mediates the relationship between intra-regional diversification and firm performance. LRF mediates the relationship between inter-regional diversification and firm performance. Missing one or more of these variables may result in different cost estimates. Identification of the relationships between these variables helps to improve the accuracy of estimating the costs of doing business aboard.

Date: 2013
References: Add references at CitEc
Citations: View citations in EconPapers (58)

Downloads: (external link)
http://www.palgrave-journals.com/jibs/journal/v44/n6/pdf/jibs201321a.pdf Link to full text PDF (application/pdf)
http://www.palgrave-journals.com/jibs/journal/v44/n6/full/jibs201321a.html Link to full text HTML (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:jintbs:v:44:y:2013:i:6:p:635-647

Ordering information: This journal article can be ordered from
http://www.springer. ... nt/journal/41267/PS2

Access Statistics for this article

Journal of International Business Studies is currently edited by John Cantwell

More articles in Journal of International Business Studies from Palgrave Macmillan, Academy of International Business
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().