Jean-François Hennart, Thomas Roehl, Ming Zeng
Progress in understanding the liability of foreignness requires accurate measurement of this concept. This paper investigates whether exits of foreign affiliates from a given host market provide a reliable measure. We tackle this question by investigating 32 exits of Japanese manufacturing affiliates from the US. Our goal is to assess the extent to which exits are driven by a liability of foreignness and thus whether exits can serve as a reliable measurement of this liability. We find that less than half of our exits are attributable to a liability of foreignness. We conclude that while the data confirm a liability of foreignness for Japanese early entrants into the US, the presence of many other motives for exit suggests caution when inferring such a liability from exits, especially when exit costs are low. © 2002 Elsevier Science Inc. All rights reserved.
Department of Strategy and Organization, Tilburg University, 5000 le Tilburg, PO Box 90153, Netherlands; Western Washington University, FMDS, Parks Hall, MC-9077, Bellingham, WA 98225-9077, United States; INSEAD, Singapore 138776, 1 Ayer Rajah Avenue, Singapore
