Who needs to know? Knowledge LOF risk and the subsidiary staffing decision

Abstract

This paper analyses knowledge-related liability of foreignness (‘KLOF’) risk in the context of foreign subsidiary staffing decisions, to explore how the latter affects the former. KLOF risk related to a lack of complete knowledge of the host country is centred at the critical link between specific home country and host country individuals. Assessment of KLOF risk must begin with the question: ‘Who needs to know?’ Subsidiary staffing decisions shift the location of KLOF risk, changing the answer. To enhance the depth of KLOF analysis, the next step involves assessing knowledge due diligence affecting those with the greatest need for host country information. The central contributions of this KLOF work include identification of the critical link or location of risk affected by staffing decisions, and exploration of knowledge due diligence as the concept that may foster increased understanding of KLOF risk to suggest future measurement and mitigation approaches.