Transforming the liability of outsidership into assets of outsidership: a comparative study of Japanese automotive subsidiaries in Russia

Causal mechanisms of COVID-19 disruptive effects on liability of foreignness and the emergence of new firm-specific advantages

“…Consequently, we have confirmed limitations of the effectiveness of their superior FSAs ( Bohnsack et al, 2021 ; Grøgaard et al, 2019; Sato & Panibratov, 2022 ; Surdu and Narula, 2021 ) in such turbulent circumstances as their authentic FSAs did not help firms solve their issues (e.g., McDonald & El-Said, 2002 ; Delios and Henisz, 2000 , Delios and Henisz, 2003 ; Zaheer, 1995 , Zaheer, 2002 ). This might have been because of a combination of COVID-19 disruptive effects and the special conditions of transitional capitalism as well as the regulative institutional context highly influencing the activities of foreign subsidiaries in CEE countries and Russia (e.g., Halaszovich, 2020 ; Puffer & McCarthy, 2017 ; Ralston et al, 2008 ; Rickley & Karim, 2018 ; Spillan et al, 2021 ; Steger et al, 2011 ).…”

“…For instance, AMNCs tend to create and exploit their FSAs brought from their HQs in advanced economies, while EMNCs attempt to catch up with average per with rivals ( Awate et al, 2015 ). Moreover, a recent study confirmed that AMNCs are more sensitive to the conditions of the host country’s institutional environment and prefer utilizing their superior FSAs rather than learning from past experiences abroad (e.g., Adarkwah & Malonæs, 2020 ; Awate et al, 2015 ; Cuervo-Cazurra, 2012 ; Giuliani et al, 2014 ; Sato & Panibratov, 2022 ; Surdu and Narula, 2021 ; Tsui-Auch & Chow, 2019 ; Wan et al, 2020 ).…”

“…LOF as an additional cost for MNCs can also be caused by the unfamiliarity of formal institutions, which is generated from unfamiliar social, political, and financial contracts among different institutions across geographic locations ( Hymer, 1976 , Hennart, 1982 , Kostova and Zaheer, 1999 , Zaheer, 1995 , Zaheer, 2002 ). There is often a lack of access to necessary information and resources, and discrimination in the local market (e.g., Eden & Miller, 2004 ; Kostova & Zaheer, 1999 ; Luo et al, 2002 ; Mezias, 2002 ; Sato & Panibratov, 2022 ; Wan et al, 2020 ; Zaheer, 1995 , Zaheer, 2002 ; Zaheer & Mosakowski, 1997 ). The unfamiliarity of a foreign company with the host country’s environment may lead to incorrect assessments based on insufficient or incorrect information in decision-making and strategic management ( Eden & Miller, 2004 ) and also coupled with limited access to local networks or finding local partners, can be seen as the main cause of LOF in the institutionally vulnerable environment of emerging markets.…”

“…FSAs are defined as a firm’s competitive advantages ( Awate et al, 2015 , Mehreen et al, 2021 ) derived from specific assets, especially intangibles, and an ability to give a company a superior competitive position ( Adarkwah and Malonæs, 2020 , Sato and Panibratov, 2022 ). Traditionally, authentic FSAs in the host country consist of advantages outside transferred from another country, including the parent company’s HQs, as well as specific advantages from other foreign subsidiaries within the same business group ( Arikan et al, 2019 , Sato and Panibratov, 2022 , Schaefer, 2020 , Rugman and Verbeke, 2003 ). Simultaneously, these FSAs reflect a firm’s broad, multi-faceted advantages, including competitive advantages, corporate capabilities, core managerial competencies, and ownership advantages ( Cantwell et al, 2010 ).…”

“…IB scholars have initiated emerging discussions on “how” and “when” new FSAs are developed by MNCs under “what kind of conditions” ( Adarkwah and Malonæs, 2020 , Halaszovich, 2020 , Wan et al, 2020 ). A firm’s experience and organizational learning in a host county can contribute to international expansion success because generally international experiences in a host country can create new FSAs that potentially can offset EMNCs’ LOF ( Kubny and Voss, 2014 , Luiz et al, 2017 ), but they would not be effective for AMNCs in a particular market ( Bohnsack et al, 2021 ; Grøgaard, Colman, & Stensaker, 2019; Sato & Panibratov, 2022 ; Surdu and Narula, 2021 ).…”