The dynamics of the liability of foreignness: A global study of survival in financial services

Srilata Zaheer, Elaine Mosakowski

Research output: Contribution to journalArticle

586 Scopus citations

Abstract

We study the impact of 'foreignness' on survival in interbank currency trading worldwide over the period 1974-93. In particular, we develop hypotheses on the behavior of the liability of foreignness over time, and on the consequences of evolving sources of firm-level competitive advantage on this liability. We test these hypotheses on the population of 2667 market-making trading rooms located in 47 countries worldwide that either existed in 1974 or entered the industry between 1974 and 1993. The results show that there is a liability of foreignness, and that it changes over time. Further, strategic and organizational factors such as the adoption of technology by these firms and their mode of internal control significantly influenced survival, as did location-related factors such as the intensity of local and foreign competition.

Original languageEnglish (US)
Pages (from-to)439-463
Number of pages25
JournalStrategic Management Journal
Volume18
Issue number6
StatePublished - Jun 1997

Keywords

  • Dynamic competitive advantage
  • Financial services
  • Liability of foreignness
  • Multinational enterprise
  • Organizational ecology

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