Moving beyond Liability of Foreignness: Liability of Outsidership and an Extension of Uppsala Intern (WITHDRAWN)

Purpose The purpose of this paper is to utilize key insights from social network theory (SNT) to enhance understanding of overcoming the liability of outsidership as a prerequisite for firm internationalization. Specifically, it examines the influence of structural attributes of networks on the motivational stance of both network insiders and outsiders in relation to overcoming the liability of outsidership. A related aim is to explore the role of network positions of insider actors in terms of its impact on the speed of market entry. Design/methodology/approach The paper draws on the extant literatures on firm internationalization, particularly the liability of outsidership, and SNT to identify to what extent SNT can be utilized to deeply understand the process of overcoming the liability of outsidership. The authors put forward eight propositions linking structural and positioning attributes of networks with overcoming the liability of outsidership. Findings SNT provides strong potential for a more comprehensive understanding of the internationalization phenomena through shedding light on the relationship between the liability of foreignness and the liability of outsidership. The paper demonstrates that while the cost of overcoming the liability of outsidership is higher in closed target network as compared to open networks, the expected benefits of an insidership position in closed or open networks are affected by the outsider firm’s perception of the liability of foreignness in the market it wishes to enter. Considering the differential enabling characteristics of closed and open networks in terms of facilitating tacit knowledge sharing as opposed to explicit information flows, the authors reveal that liability of foreignness operates as a negative moderator for the relationship between network structure and the willingness of the outsider to invest in gaining insidership. The analysis of the paper also shows that the positional attributes of the network insider are relevant in outsiders’ motivation in terms of the speed of market entry that they seek to achieve. Originality/value This study theoretically contributes to the internationalization research through integrating SNT with the liability of outsidership understanding of firm internationalization. This is a timely attempt as no systematic application of the conceptual apparatus of SNT in the internationalization research context has been studied. It adds a more coherent inside-out perspective into the overcoming the liability of outsidership discussion which has been extensively dominated by an outside-in perspective.

Download Full-text

The Uppsala Internationalization Process Model Revisited: From Liability of Foreignness to Liability of Outsidership

Knowledge, Networks and Power ◽

10.1057/9781137508829_7 ◽

2015 ◽

pp. 153-186 ◽

Cited By ~ 1

Author(s):

Jan Johanson ◽

Jan-Erik Vahlne

Keyword(s):

Process Model ◽

Liability Of Foreignness ◽

Internationalization Process ◽

Liability Of Outsidership ◽

Internationalization Process Model

Download Full-text

Co-operation between Large Enterprises (LE’s) and SME’s: an Approach to Overcome the Stage Internationalization Process

Verslas teorija ir praktika ◽

10.3846/btp.2014.448 ◽

2014 ◽

Vol 15 (4) ◽

pp. 316-327 ◽

Cited By ~ 4

Author(s):

Eurico Brilhante Dias ◽

Daniel Serra Lopes

Keyword(s):

Foreign Market ◽

International Markets ◽

Liability Of Foreignness ◽

Internationalization Process ◽

Case Study Method ◽

Specific Knowledge ◽

Domestic Markets ◽

Liability Of Outsidership ◽

International Venture

Many companies are using their networks in order to overcome psychic distance – liability of foreignness – and liability of outsidership; and networks at domestic markets can be a base in which SMEs can find a lever to get a rapid internationalization process. Regarding this topic has been developed a case study in the Polish market, where a local retailer (“Biedronka”) owned by a Portuguese group (“Jerónimo Martins”) is offering Portuguese products. In order to apply a constructivist methodology, using the case study method, five SMEs where selected in order to understand if co-operation between these companies and a LE (Large Enterprise) would be a way in order to overcome the liability of foreignness and the liability of outsidership. It was also our purpose the understanding of which are the main issues that promote insidership and also the promotion of a rapid internationalization. Our conclusions have shown a LE as a source of institutional and market-specific knowledge, and regarding this last type of knowledge, as source of opportunities, and also how a SME with internationalization knowledge, an international focus and adaptation skills (in order to adapt products and prices) can introduce in a co-operative international venture, in far psychic markets, the ingredients needed to get a successful and rapid entry in a foreign market. Trust as a resource, accumulated during lasting relationships in the domestic market, has been shown as a basic requirement to develop these co-operative approaches in international markets.

Download Full-text