Liability of Emergingness of Emerging Market Banks Internationalizing to Advanced Economies

International management scholars are paying increasing attention to the internationalization of service firms from emerging markets, but empirical research on the challenges facing such firms remains scarce. This study examines how emerging market banks (EMBs) cope with the liability of emergingness. To this end, we conducted exploratory, qualitative interviews with Brazilian and Chinese bankers. We found that the liability may hamper the ability of EMBs to engage in institutional isomorphism in order to effectively embed themselves into host locations. The results reveal that liability of emergingness is a problem, particularly for Chinese banks whose internationalization links with the Belt Road Initiative—national strategy to support the Chinese firms go global. The findings indicate that a major problem is that senior managers in the home countries fail to understand the importance of differences between home and host country institutional systems. The low level of autonomy granted to subsidiary managers, which arises from this lack of understanding on the part of their headquarters, hinders the ability of subsidiaries to effectively engage in normative and mimetic isomorphism to embed into host location institutional systems. The study also highlights differences in how Brazilian and Chinese banks might address this challenge