Overcoming the Liability of Foreignness in International Retailing: A Consumer Perspective


Foreign firms usually suffer the liability of foreignness (LOF), which refers to additional costs incurred by a firm when conducting business overseas that local firms do not incur. In this paper, we focus on one type of consumer bias, namely the perceived importance of supporting domestic retailers (PISD), and investigate whether foreign retailers can overcome the LOF with specific advantages they might possess. Our results show that to overcome the LOF, foreign retailers should emphasize value-for-money store attributes by increasing product quality and running effective promotional campaigns, rather than increasing their investment in hedonic attributes such as services (e.g., salespeople’s service and fast checkout) or social responsibility.

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