The foreignness effect on internationalisation depth: the perspective of multicomplexity and the duality of foreignness

• Published in: International journal of emerging markets 2023-12, Vol.18 (11), p.4787-4818
• Main Authors: Yen, I-Fan, Lin, Hsin Mei, Shih, Yi-Tien
• Format: Article
• Language: English
• Subjects: Complexity; Country of origin; Culture; Developed countries; Embeddedness; Emerging markets; Frame analysis; Globalization; Host country; Multinational corporations; Networking; Organization theory; Ownership
• ISSN: 1746-8809; 1746-8817
• DOI: 10.1108/IJOEM-12-2020-1522

PurposeThe literature on foreignness has, to date, stressed the liability of foreignness (LOF) and the advantage of foreignness (AOF). Drawing on industrial organisation theory, institutional theory, the resource-based view of the firm and the literature on networking, the authors’ research develops an integrated framework to explore the impact of foreignness on internationalisation depth from the perspective of the duality of foreignness (LOF versus AOF) within multiple dimensions. These dimensions are isomorphism, home country of origin, institutional distance and dual embeddedness of multinational enterprises (MNEs).Design/methodology/approachIn this study, the authors empirically test hypotheses arising from this new theoretical framework by examining the characteristics of a sample of 324 Chinese MNEs (CMNEs) that were operating in 63 countries from 1999 to 2018. Employing regression analysis on a panel of 9,410 observations, the results show that foreignness does exhibit multilevel complexity and duality.FindingsThe authors’ empirical results show that isomorphism pressures, country of origin and institutional distance have a negative effect on internationalisation depth (as an outcome of LOF) but that dual embeddedness, on the part of MNEs, exerts a positive impact on internationalisation depth (as an outcome of AOF). The implications for research on multilevel complexity and the duality of foreignness are discussed, and managerial implications are outlined.Research limitations/implicationsThe implications of the authors’ findings for MNEs should not be generalised to developed countries without examining the characteristics of both China as an emerging country and its MNEs. The second limit is regarding ownership; this framework has limitations due to choosing China and its OFDIs for testing internationalisation depth. Finally, for subsequent research, examining the dynamics of foreignness completes the nature of multicomplexity, defined by external and internal factors of foreignness changing over time and space.Practical implicationsCMNE managers are advised to actively scrutinise their behaviours in the local country to overcome the differences in routines, values and practices inherent in local institutions (Chen et al., 2019). The results imply that CMNEs should be careful not to overuse their home country image when penetrating a new market. Thus, a strategy to reduce a home government's hegemonic or otherwise negative image may be wise when