The liability of foreignness and operational security: evidence from emerging markets
研究发现外资持股比例越高，企业越容易遭遇安全漏洞并承担更高安全成本，但东道国制度质量和企业本地嵌入能缓解这一风险。
Purpose In this research, we explore the adverse impact of foreign ownership on operational security, a critical operational implication of the liability of foreignness (LOF). Design/methodology/approach The empirical analysis is based on a multi-country dataset from the World Bank Enterprises Survey, which contains detailed firm-level information from over 8,902 firms in 82 emerging market countries. We perform a series of robustness checks to further confirm our findings. Findings We find that a high ratio of foreign ownership is associated with an increased likelihood of security breaches and higher security costs. Our results also indicate that high levels of host countries’ institutional quality and firms’ local embeddedness can mitigate such vulnerability in operational security. Originality/value This study is one of the first to uncover the critical operational implication of the LOF, indicating that a high ratio of foreign ownership exposes firms to operational security challenges.