Overcoming the Liability of Foreignness – A New Perspective on Chinese MNCs

Mingchun Cao and Ilan Alon
Publication Date: 
September 2nd, 2021

Studies about the so-called “liability of foreignness” for multinational corporations (MNCs) have given inadequate attention to the impact of “the importance of the firm’s dependence on their parents, subsidiaries, and local resources.” Drawing upon 43 semi-structured interviews with expatriate and local managers of Chinese high-tech MNCs this article identifies six dimensions that influence the liability of foreignness: resource commitment, information flow, resource control, resource integration, local responsiveness, and flexibility of control. Subsidiaries of Chinese MNCs form interdependencies with headquarters and local stakeholders and adapt to the host country by using expatriates and local employees as a mechanism for resource transfer.

This piece originally appeared as Mingchun Cao and Ilan Alon, “Overcoming the liability of foreignness–A new perspective on Chinese MNCs,” Journal of Business Research 128 (May 2021), pp. 611-626. Copyright remains with the original holder.