- Title
- Liability of foreignness: role of formal and informal institutions in India and China
- Creator
- Maitland, Elizabeth; Nicholas, Stephen
- Relation
- Innovation in Management Practices p. 273-280
- Relation
- Macmillan Advanced Research Series
- Relation
- http://www.macmillanindia.com/book-details.asp?category=General+%26+Reference&broadsubject=Business+%26+Management&detailedsubject=General+Management&detailedid=52&broadid=38&from=gr&bookid=3430&page=search
- Publisher
- Macmillan Publishers India
- Resource Type
- book chapter
- Date
- 2008
- Description
- Without well-structured formal and informal institutions that promote economic exchange through the exchange of goods for services; labour for goods; and goods for goods, a society's growth is limited. To permit economic exchange, a society needs to develop institutions or the "rules of the game" by which business firms "play", in order to reduce uncertainty, facilitate information exchange and provide enforcement mechanisms that allow economic exchange (North, 1990, 2005). These "rules of the game" comprise, first, the formal institutions or the county's constitution, laws, regulations and policies that regulate, support and enforce economic exchange. Second, the "rules of the game" are the informal institutions or the country's web of social, cultural and, often, religious rules of behaviour, including mores, values and beliefs. The "players" are the economic, social, political organisations that undertake economic exchange within the "rules of the game". The economic organisations include both domestic and international firms, and the country's quasi-economic organisations, such as trade associations and unions. Compared to domestic firms, international firms that conduct cross country economic exchange, whether through trade or direct investment, incur additional costs in host countries, which is the liability of foreignness (Eden and Miller, 2004; Zaheer, 1995). Using empirical data from China and India, this chapter analyses the liability of foreignness that arises through the interaction of multinational firms with the formal and institutions in the host countries of India and China. The aim is to understand how the liability of foreignness shapes the types of entry modes and contracts selected by foreign firms and to provide policy advice on how to mitigate the liability of foreignness.
- Subject
- China; India; foreignness; liability
- Identifier
- uon:6423
- Identifier
- http://hdl.handle.net/1959.13/803543
- Identifier
- ISBN:9780230637160
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