Journal
JOURNAL OF INTERNATIONAL BUSINESS STUDIES
Volume 38, Issue 5, Pages 709-725Publisher
PALGRAVE MACMILLAN LTD
DOI: 10.1057/palgrave.jibs.8400295
Keywords
cost of doing business abroad; liability of foreignness; internationalization; multinational enterprises; resource-based theory
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We study the causes of the difficulties faced by firms when they internationalize in search of new markets. We build on the resource-based theory to argue that the difficulties in internationalization can be separated into three main sets based on their relationship to advantage: loss of advantage provided by resources transferred abroad; creation of a disadvantage by resources transferred abroad; and lack of complementary resources required to operate abroad. In each set, we further distinguish difficulties that are specific to a firm from those that are common to a set of firms. We argue that only a few of the resulting types of difficulties of internationalization are exclusive to the cross-border expansion, and propose solutions that address the root cause of each type.
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