Liability and advantage of foreignness in a digital world:The performance of foreign and local apps

Abstract

This study compares the performance of foreign and local mobile apps along different dimensions. We argue that foreign mobile apps have fewer active users than local mobile apps due to their low perceived value and high perceived costs, thereby reflecting the liability of foreignness in a digital world. However, foreignness also brings certain benefits, such as the capability to satisfy long-tail users’ specific needs. Thus, foreign mobile apps also enjoy higher daily usage time than local apps. Next, we consider two moderators. A high level of physical presence increases a foreign mobile app’s ability to understand local users’ needs and also enhances the legitimacy of the foreign app, thus reducing the liability of foreignness in a digital world. A high level of diversity of experience increases a mobile app’s ability to understand and satisfy long-tail users specific needs, thus enhancing the advantage of foreignness in a digital world. We test these ideas using daily usage data of 32 travel mobile applications installed on a major mobile phone brand in China in a period of 251 days and find support for our arguments.