Scandinavian Working Papers in Business Administration

Working Papers,
Copenhagen Business School, Department of International Economics and Management

No 11-2001: Coping Liability of Foreignness: Different Learning Engagements of Entrant Firms

Bent Petersen and Torben Pedersen
Additional contact information
Bent Petersen: Department of International Economics and Management, Copenhagen Business School, Postal: Department of International Economics and Management, Copenhagen Business School, Howitzvej 60, 2nd floor , DK-2200 Copenhagen N, Denmark
Torben Pedersen: Department of International Economics and Management, Copenhagen Business School, Postal: Department of International Economics and Management, Copenhagen Business School, Howitzvej 60, 2nd floor , DK-2200 Copenhagen N, Denmark

Abstract: Much has been written about how international firms create and sustain firm-specific advantages that offset their liability of foreignness. Less attention has been devoted the question of how international firms reduce their liability of foreignness. It is the contention of this study that entrant firms familiarize with foreign markets at different pace and to some extent are these differences due to varying management control of entrant firms. Thus, whereas the general approach to the liability of foreignness issue has been somewhat deterministic the study emphasize managerial discretion as a potentially important factor. The data from a sample of 494 international firms from Sweden, Denmark and New Zealand suggest that entrant firms’ learning engagement, i.e. the effort and ability to learn how to conduct business in a foreign environment, varies considerably. In particular, adoption of standardized, international business routines and unwillingness to adapt products and marketing practices to local markets seem to be associated with a low learning engagement. The data also indicate that a large proportion of the entrant firms have been engaged in pre-entry learning.

Keywords: Liability of foreignness; learning engagement; managerial discretion.

23 pages, June 11, 2001

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