Towards a Better Understanding of Foreignness: An Institutional Perspective.

Foreignness is the defining trait of multinational enterprises (MNEs) given that MNEs are unique in operating across national borders. As foreignness generates liabilities and advantages for MNEs in host countries, it is critical for MNEs to survive and succeed. While there has been an increasing literature on the liability of foreignness, there has been little research discussing the advantage of
foreignness and how to turn foreignness from liabilities into advantages. This conceptual paper seeks to examine foreignness of MNEs from the institutional perspective, aiming to provide a unified framework and a powerful analytic tool to understand the nature and mechanisms that foreignness generates liabilities or advantages for MNEs.