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Journal of International Business Studies

, Volume 38, Issue 5, pp 709–725 | Cite as

Causes of the difficulties in internationalization

  • Alvaro Cuervo-CazurraEmail author
  • Mary M Maloney
  • Shalini Manrakhan
Article

Abstract

We study the causes of the difficulties faced by firms when they internationalize in search of new markets. We build on the resource-based theory to argue that the difficulties in internationalization can be separated into three main sets based on their relationship to advantage: loss of advantage provided by resources transferred abroad; creation of a disadvantage by resources transferred abroad; and lack of complementary resources required to operate abroad. In each set, we further distinguish difficulties that are specific to a firm from those that are common to a set of firms. We argue that only a few of the resulting types of difficulties of internationalization are exclusive to the cross-border expansion, and propose solutions that address the root cause of each type.

Keywords

cost of doing business abroad liability of foreignness internationalization multinational enterprises resource-based theory 

Notes

Acknowledgements

The paper was created when the first author was Assistant Professor and the second and third authors were PhD students at the University of Minnesota. The financial support of the University of Minnesota is gratefully acknowledged. The comments of Scott Johnson, Miguel Ramos, Kendall Roth, Annique Un, Sri Zaheer, anonymous reviewers, the associate editor Nicolai Foss, and participants at the Research Seminar at the University of Minnesota, Academy of Management annual meeting, European International Business Academy annual meeting, and Academy of International Business annual meeting, helped improve previous versions of the paper. All errors remain ours.

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Copyright information

© Academy of International Business 2007

Authors and Affiliations

  • Alvaro Cuervo-Cazurra
    • 1
    Email author
  • Mary M Maloney
    • 2
  • Shalini Manrakhan
    • 3
  1. 1.Moore School of Business, University of South CarolinaColumbiaUSA
  2. 2.Department of ManagementOpus College of Business, University of St ThomasMinneapolisUSA
  3. 3.Faculty of Engineering, University of MauritiusReduitMauritius

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