In the context of companies entering foreign markets, which of the following statements is true of the liability of foreignness?
A) Companies doing business in countries that are geographically proximate face a small liability of foreignness.
B) Companies doing business in countries that are economically dissimilar face a small liability of foreignness.
C) Companies doing business in countries that share a common cultural base face a large liability of foreignness.
D) Companies doing business in countries that have few administrative differences face a large liability of foreignness.

Question

Quizplus · Accepted Answer

The liability of foreignness refers to the inherent disadvantages that foreign firms experience in a host country due to their non-native status. Companies operating in geographically proximate countries often face a smaller liability of foreignness because of similarities in culture, legal systems, or economic environments, which can make it easier to conduct business.

In the Context of Companies Entering Foreign Markets, Which of the Following