Question

The "liability of foreignness" is the

a. inability of most U.S. managers to truly comprehend foreign cultures.
b. political disadvantage that U.S. firms have when doing business abroad.
c. overall risks of participating outside a firm's domestic country when entering global competition.
d. strong cultural preference for "buying local," which puts foreign firms at a disadvantage when competing in the U.S. market.

Answer 1

The liability of foreignness refers to the overall risks and disadvantages firms encounter when entering foreign markets, including cultural, political, and economic challenges.

Step-by-step explanation:

The "liability of foreignness" is the concept used to describe the various costs and disadvantages that firms encounter when they enter foreign markets. These costs may arise from a number of sources such as cultural, political, and economic differences between the home country and the host country. With globalization, firms face the challenge of competing against local firms that may benefit from a deeper understanding of the local market, consumer preferences, and government relations.

Additionally, there can be a strong cultural preference for "buying local", which can disadvantage foreign firms. The liability of foreignness encompasses more than just an inability to understand foreign cultures or political disadvantages; it refers broadly to the overall risks and challenges of competing outside a firm's domestic market. This includes the need for foreign firms to "Americanize" their products in the U.S., or any local adaptation necessary to compete effectively in a foreign market.