Overcoming the liability of foreignness through international business incubators: an empirical analysis of the Chinese environment

Firms interested in becoming multinational companies must face additional costs, labelled by scholars as the liability of foreignness. These costs are: spatial distance and geography, lack of roots in the local environment, lack of legitimacy because of economic nationalism and the high cost of information acquisition for foreign firms. These liabilities are particularly strong for companies interested in entering China, a massive economy with high growth rates. To help enterprises overcome such liabilities, international business incubators emerged in the 1980s, offering a set of services to firms interested in pursuing internationalisation strategies. However, studies on such kinds of actors are limited, particularly the dynamics underlying the support that these programmes offer to firms. Through case studies of seven international business incubators located in China, we highlighted how these programmes help start-ups overcome the liability of foreignness, and determined the dimensions that are relevant to improving the success of international firms.