How an emerging market firm overcomes liabilities and builds legitimacy in a high-quality institutional environment
DOI:
https://doi.org/10.18568/internext.v18i1.701Keywords:
Liability, Legitimacy, Emerging Market Firm, Developed Market, AcquisitionAbstract
Objective: To examine how an emerging market firm adopts specific strategies to neutralize the liabilities of foreignness (LOF), emergingness (LOE) and outsidership (LOO), and to gain legitimacy in a high-quality institutional environment.
Method: Single in-depth case study of a Brazilian firm in the information technology industry based on secondary data and interviews.
Main Results: The study shows how the acquisition of a local company addressed the three liabilities: LOF, by acquiring knowledge on the host country’s institutional environment; LOE, by detaching the company image from the home country and emphasizing a global image; and LOO, by gaining access to already established connections to international networks by the acquired firm.
Relevance/ Originality: There is still a dearth of literature on how firms from emerging economies other than China — and particularly from Latin America — strategize to mitigate LOF, LOE and LOO when internationalizing to high-quality institutional environments.
Theoretical/ Methodological Contributions: To provide a fine-grained view of the relationship between LOF, LOE and LOO and their manifestations; and to provide an understanding of the relationship between the liabilities and the legitimation strategies adopted to overcome them along the international expansion of an emerging market high-tech firm from Latin America.
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