Vantage of Foreignness: How Expansion Abroad Influences Resource Acquisition at Home

Abstract

This paper examines how global expansion of privately-owned enterprises (POEs) from emerging economy influences their resource acquisition back in the home country. We argue that, while POEs confront the liability of foreignness in host countries, the same ‘foreignness’ through global expansion serves as a positive signal to stakeholders at home market, thus mitigating POEs’ liability of privateness and facilitating their resource acquisition. Using Chinese listed companies as our research context, we found that global expansion of Chinese POEs significantly increased their subsequent financial resource acquisition from home country banks and suppliers. We also found that this positive effect was amplified when POEs entered more advanced economies and adopted greenfield investment (versus acquisition) as the mode of entry, but was attenuated when POEs had stronger political connections. We conclude the paper by discussing the implications of our findings for research on liability of foreignness, liability of privateness and internationalization of emerging economy firms.