Liability of Foreignness and Location-Specific Advantages: Time, Space and Relative Advantage

Abstract

Location-specific advantages (LSA) and the liability of foreignness (LOF) are key concepts in international business and management research. To combine these concepts in a systematic framework, I develop a two-by-two matrix focusing on the nature of International Business (IB) research using four key terms: firm, context, comparative and interactive. This framework serves as a heuristic device in describing three main challenges IB scholars face when advancing the role of LOF and LSAs. These challenges relate to our understanding of the nature of relative advantage, to the development of a dynamic (so-called non-ergodic) world view and to the inclusion of the relevant spatial heterogeneity.