Country‐of‐Origin and Social Resistance in Host Countries: The Case of a Chinese Firm

Abstract

While China ' s outward direct investments continue to soar, many Chinese fi rms reportedly face social resistance in host countries during the internationalization process. We explore this phenomenon from a country-of-origin ( COO ) perspective using Fiske and colleagues' (Fiske, Cuddy, Glick, & Xu, 2002 ;Fiske, Xu, Cuddy, & Glick, 1999 ) stereotype content model. Our fi ndings from a recent case in New Zealand show that China ' s COO emerges as a key variable infl uencing how local actors view Chinese investors. Specifi cally, despite China ' s signifi cant economic and social developments over the past decades, it suffers from a somewhat negative country image in two stereotype dimensions: competence and warmth. This leads to a perception by local actors that Chinese fi rms are of low quality, which explains the source of resistance in society. To address such a liability of origin, Chinese fi rms must learn to deal with this form of stereotypical judgment encountered in a host environment. Further contributions and limitations of the study are discussed in the article.

Overcoming liabilities of origin: Human resource management localization of Chinese multinational corporations in developed markets

“…The well-established factor markets in developed economies provide MNCs with access to multiple resources, including financial capital, advanced technology, managerial expertise, and skilled labor (Hoskisson, Wright, Filatotchev, & Peng, 2013), and the highly developed institutional configurations enable firms to build up strong learning processes that they can exploit internationally (Ramachandran & Pant, 2010). Furthermore, developed economies, such as the United States, Germany, and Japan, have developed positive country images, which are characterized by reliable corporate governance and superior economic performance (Yu & Liu, 2016). The positive country images grant developed market MNCs the legitimacy to adopt their standardized HRM practices and even provide them exemptions from fulfilling some local requirements (Ferner, Quintanilla, & Varul, 2001).…”

“…As a result, foreign subsidiaries often experience higher costs of investing, operating, and managing in the host country than local firms do (Pant & Ramachandran, 2012). While liabilities of foreignness are common obstacles for all MNCs in foreign markets, LOR is particularly prominent among emerging market MNCs operating in developed economies, such as Chinese MNCs in the United States (Yu & Liu, 2016).…”

Relationship between country brand and internationalization: a literature review

“…On the contrary, a negative image abroad can also disturb country firms when internationalizing. This is the case of China, reported by Kreppel and Holtbrugge (2012) and Yu and Liu (2016), whose firms and its products still deal with the challenge of a negative image of the country when investing abroad.…”

China's quest for economic dominance and energy consumption: Can Asian economies provide natural resources for the success of One Belt One Road?

“…As mentioned earlier, firms from emerging economies face foreignness while entering industrial countries due to the institutional embeddedness in the home country (Epstein, 2019). When FDI is impacted by resource‐seeking behavior, firms from emerging economies face even more regulatory scrutiny because of their origin (Shapiro et al, 2018; Yu & Liu, 2018). Facing such regulatory scrutiny is a challenge for firms from emerging economies, which is why these firms find that it is easier to operate in economies with smaller institutional distance.…”

“…When FDI is impacted by resource-seeking behavior, firms from emerging economies face even more regulatory scrutiny because of their origin (Shapiro et al, 2018;Yu & Liu, 2018). Facing such regulatory scrutiny is a challenge for firms from emerging economies, which is why these firms find that it is easier to operate in economies with smaller institutional distance.…”