An institutional logics approach to liability of foreignness The case of mining MNEs in Sub-Saharan Africa

Prior research on firms’ liability of foreignness (LOF) has emphasized the role of isomorphic behavior in overcoming LOF. However, the literature has not adequately considered how firms can overcome LOF under conditions of institutional complexity, when fundamental differences in firms’ home and hos...

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Bibliographic Details
Published inJournal of international business studies Vol. 49; no. 7; pp. 881 - 901
Main Authors Newenham-Kahindi, Aloysius, Stevens, Charles E
Format Journal Article
LanguageEnglish
Published London Springer Science + Business Media 01.09.2018
Palgrave Macmillan UK
Palgrave Macmillan
Subjects
Business and Management
Business Strategy/Leadership
Companies
Entrepreneurship
International Business
Liability
Management
Mining
Multinational corporations
Organization
Qualitative research
Sub-Saharan Africa
liability of foreignness
institutional logics
Africa
qualitative analysis
embedded agency
institutional change
institutional entrepreneurship
intermediary
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Summary:Prior research on firms’ liability of foreignness (LOF) has emphasized the role of isomorphic behavior in overcoming LOF. However, the literature has not adequately considered how firms can overcome LOF under conditions of institutional complexity, when fundamental differences in firms’ home and host country values, beliefs, and rules may make isomorphic behaviors impossible or undesirable. In this article, we use the emerging research on institutional logics and institutional entrepreneurship to address this important issue by examining case studies of eight foreign mining MNEs experiencing LOF in Sub-Saharan Africa. Based upon our qualitative analysis, we find that MNEs can overcome LOF by co-creating new institutional logics rather than conforming to existing ones. Yet our data show that this is a difficult process, one that may not be capable of being done unilaterally by the MNE. Instead, we find that local employees embedded in both sets of competing institutional logics acted as key intermediaries who facilitated institutional entrepreneurship. Moreover, we found that firms’ implementation strategy matters as well: in some cases, institutional entrepreneurship mitigated LOF; in others, friction returned to varying degrees.
ISSN:0047-2506
1478-6990
DOI:10.1057/s41267-017-0111-y