Interaction approach and liabilities: A case analysis of start-up firms

The paper provides some evidence on the relationship between interaction and liabilities in domestic and foreign markets. The paper has a twofold aim: the first is to explore how different types of liabilities affect firms, with particular regards to start-up firms; the second aim is to investigate to what extent interaction between actors on the market represent a way to overcome such liabilities that firms may suffer. Different theoretical perspectives on this issue are presented. We present liabilities related to age – liability of newness – and size – liability of smallness – introduced into the organizational literature (Freeman et al., 1983), and liabilities of foreignness and outsidership as developed in the literature of internationalization (Zaheer, 1995; Johanson and Vahlne, 2009). Liabilities are analysed both in the domestic and in foreign markets. The topic of interaction is addressed on the basis of the interaction approach developed by scholar of the IMP group (Ford et al., 2008). With regard to methodology, the paper presents case studies of start-up firms, aiming at deeply analysing the theme of the paper. We also present a theoretical background in which the literature on liabilities and the literature on interaction based on the IMP approach are both reviewed with the aim of bringing out common features and outlining future research agenda. The resulting framework is discussed comparing literature and case analysis with the contents emerging from the case analysis. The paper points out the main liabilities that represent a constraint and difficulty for start-up firms both in domestic and foreign markets, and the role of interaction with other actors in overcoming such liabilities.