Liability of foreignness is the inherent disadvantage experienced by foreign firms in host countries because of their non-native status. True / False.

Question

Lewis Santana

Business

13 November, 03:24

Liability of foreignness is the inherent disadvantage experienced by foreign firms in host countries because of their non-native status. True / False.

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Answers (1)

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Libby King · Answer 1

True

Explanation:

It is an inherent disadvantage that foreign firms experience in the host country because of non-native status. It is considered as liability of foreignness as foreign companies are well versed with the cultural difference, tax policies and people's response to the product and services produced, therefore foreign companies need to invest resources to learn the technique of business in different country.

To have competitive advantage in the foreign market, the companies should have organized resources, cost to compete and capabilities to offset the liability of foreignness.