Week 7 Chapter 6 Entering Foreign Markets

Week 7 Chapter 6 Entering Foreign Markets - Entering...

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Liability of Foreigness The Liability of Foreignness - the  inherent  disadvantage  foreign firms experience in host countries because of their  non-native status There is a need to learn the formal and informal  institutions within a new country Foreign firms are often discriminated against Foreign firms deploy overwhelming resources and  capabilities to offset the liability of foreignness
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Understanding the Propensity to 2 Factors: Firm Size – Larger firms have more resources and are  more likely to “fill” their home domestic markets than  smaller firms. Domestic Market Size – Larger domestic market provide  more home opportunities than do smaller domestic  markets.
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Propensity to Internationalize
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A Comprehensive Model of Foreign Market Entries
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Institutional-Based Considerations Regulatory risks: Obsolescing bargain Round 1- MNE negotiates deal with government with  assurance of property rights, tax holidays, etc. Round 2 – MNE enters and earns profits (hopefully)
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Week 7 Chapter 6 Entering Foreign Markets - Entering...

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