Country level corruption as a liability of foreignness: effects on staffing, incentives, and activities

Past research examining country-level corruption found that corruption reduces foreign direct investment. However, this research lacks implications for multinational corporations considering operating in high corruption countries. Recent international research has examined subsidiary challenges beyond initial investment decisions, but has not addressed operational challenges posed by corruption. Research investigating country-level corruption as a liability of foreignness (LOF) is needed because this theoretical perspective specifically examines mechanisms for managing and controlling subsidiaries. This paper utilizes the LOF perspective, integrating learning, international human resource management, and agency theories, to understand how corruption affects subsidiary adaptation strategies

National cultural distance as liability of foreignness: the issue of level of analysis

In this study, we focus on the use of measures of national cultural distance as a proxy for liabilities of foreignness. In particular, we focus on the dominant measure of national cultural distance: a linear combination of the differences between the two countries where the workplaces are located using indices from previously published research. Our question concerns whether measures of distance based on previously published indices at the national level are appropriate measures of cultural distance at the organizational level. Our results suggest that they are not; implications for theory and research are discussed.Cultural distance Cultural dimension Liability of foreignness