The liability of foreignness suggests that foreign firms are at a disadvantage when competing with a local firm because the local firm knows more about local customs, culture, political processes, and so on than the foreign firm. In sports, this is called the home field advantage.

Question

Quizplus · Accepted Answer

The liability of foreignness concept indeed posits that foreign firms face disadvantages in a host country due to their lack of familiarity with the local environment, similar to the concept of home field advantage in sports where the home team benefits from playing in a familiar setting.

The Liability of Foreignness Suggests That Foreign Firms Are at a Disadvantage