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Difficulties
Relationship to
advantage
Specificity Type Reduced when To solve it
Specific to a firm Inability to transfer advantage: a
resource that was the source of
advantage in existing operations loses
its advantageous characteristics when
transferred to the new country.
Competitors in the new country are not
up to par, or do not exist, particularly in
the introduction stage of an innovation.
Develop advantageous resources
locally, allowing the subsidiary to create
its own strategy and advantage.
Common to a set of
firms
Inability to create value: a set of firms in
an industry do not obtain value from the
transferred resources that were the
source of advantage in existing
operations because the firms' products
are not useful in the new country.
Not reduced. Avoid entry the new country, or exit if
already entered.
Specific to a firm Disadvantage of transfer: a resource
becomes disadvantageous when
transferred to the new country.
Firm internationalizes through trade or
reduces the value-added activities
undertaken abroad.
Evaluate the appropriateness of the
resources to the new host country;
modify the resource transferred if it
creates a disadvantage.
Government-based disadvantage of
foreignness: a set of firms from the
same home country are discriminated
against by the host government
because it dislikes their country of
origin.
Political relation between the home and
host-country governments are good.
Obtain support from government:
directly by negotiating or lobbying the
government; indirectly by linking with
prominent local actors who obtain
support.
Consumer-based disadvantage of
foreignness: a set of firms from the
same country are discriminated against
by consumers because they dislike the
firm's country of origin.
A firm or its products lack association
with the discriminated country of origin.
Avoid connection between firm and
country of origin: directly by hiding
country of origin, indirectly by using
country of origin that is different from
Loss of advantage
Common to a set of
firms
Creation of a
disadvantage