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How do local and foreign firms compete? Competitive actions in an emerging economy

Yang, W. and Meyer, K. E. (2020) How do local and foreign firms compete? Competitive actions in an emerging economy. International Business Review, 29(3), 101689. (doi: 10.1016/j.ibusrev.2020.101689)

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Abstract

When foreign and local firms compete, they face competitors acting quite differently from themselves. Specifically, their ability to engage in timely and frequent actions is influenced by, respectively, the Liability of Foreignness (LoF) and the Liability of Localness (LoL). We explore how the trade-off between LoF and LoL influences the aggressiveness of competitive actions firms take in emerging markets. Specifically, we argue that LoF results in weaker government ties that inhibit the aggressiveness of competitive actions of multinational subsidiaries, while LoL results in weaker technological capabilities that inhibit competitive aggressiveness of domestic firms. We apply structural equation modelling on Chinese survey data to test hypotheses derived from these arguments and find empirical support. Our results shed new light on competitive dynamics in an emerging economy.

Item Type:Articles
Additional Information:Financial support from the National Natural Science Foundation of China [grant number 71732004], [grant number 71532005], [grant number 71672087] and [grant number 71272180], and CEIBS Center for Emerging Market Studies is gratefully acknowledged.
Status:Published
Refereed:Yes
Glasgow Author(s) Enlighten ID:Yang, Dr Wei
Authors: Yang, W., and Meyer, K. E.
College/School:College of Social Sciences > Adam Smith Business School > Management
Journal Name:International Business Review
Publisher:Elsevier
ISSN:0969-5931
ISSN (Online):1873-6149
Published Online:21 February 2020
Copyright Holders:Copyright © 2020 Elsevier Ltd.
First Published:First published in International Business Review 29(3): 101689
Publisher Policy:Reproduced in accordance with the publisher copyright policy

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