Summary
Theme 4: Home and Host Countries (Complete Summary)
- Course
- Institution
Complete and up-to-date summary of lectures, slides, and articles
[Show more]
Seller
Follow
AceAcademy
Reviews received
Content preview
Theme IV: Home and Host Countries andConcepts of Distance
Lecture, Literature & Notes
By AceAcademy ©
, Theme IV: Home and Host Countries and Concepts of
Distance
Impact of Geographic Proximity on Multinational Enterprise (MNE)
Performance
MNE success is greatly influenced by two factors:
1. The liability of foreignness; and
2. Distance
The central concept is that when multinational enterprises (MNEs) operate across
international borders, the geographical distance they navigate plays a crucial role in shaping
their success. This distance can affect various aspects of their operations, including their
ability to accurately evaluate opportunities and threats. Moreover, even after establishing a
presence in a foreign country, MNE subsidiaries may encounter challenges in competing with
local businesses.
Questions to Explore:
1. What specific type of distance are we referring to, and why is it significant in the
context of MNE success?
2. How does geographical distance impact MNE operations and performance?
3. What factors can either exacerbate or mitigate the challenges posed by this distance?
4. How does the Liability of Foreignness (LOF) concept tie into this discussion,
particularly in relation to cultural, institutional, and psychic distances? How can LOF
have both negative and positive effects on MNEs, influencing their choice of entry
mode and market selection?
In essence, this discussion revolves around the idea that geographical distance, coupled with
the concept of Liability of Foreignness, can significantly influence the success and decision-
making processes of multinational enterprises as they navigate foreign markets.
Liability of Foreignness (LOF)
Liability of Foreignness (LOF) serves as a foundational concept underpinning various
theories related to Multinational Enterprises (MNEs), including the Internalization theory, the
Ownership-Location-Internalization (OLI) paradigm, and the Uppsala model.
In the context of LOF, MNEs often find themselves at a disadvantage compared to
local competitors when operating in a host country. This disadvantage stems from
several factors, including the increased costs associated with conducting business
abroad and the inherent non-local status of MNEs. These ideas were initially explored
by Hymer in 1976.
The disadvantages that MNEs face when operating in foreign markets, as articulated
by Zaheer in 1995, can be attributed to various factors:
o Spatial distance, encompassing expenses related to travel, transportation, and
coordination.
o Unfamiliarity with the host country, resulting in adaptation and learning costs.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller AceAcademy. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $4.28. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
50843 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now