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<p>As digital technologies significantly reshape firms’ competitive advantages, digitalization may serve as a response of foreign subsidiaries to the liability of foreignness (LOF), a topic that remains underexplored. Based on two-wave survey data from 118 foreign subsidiaries in China, we find that the LOF faced by foreign subsidiaries is positively associated with their levels of digitalization. Furthermore, this positive association is strengthened under conditions of high market competition or environmental uncertainty. This study extends the literature on responses to LOF and the antecedents of digitalization in the era of digital globalization, offering new insights for foreign subsidiaries seeking to mitigate LOF.</p>

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Foreign subsidiary digitalization: responding to liability of foreignness

  • 期刊论文

  • 发表日期：

    2026年1月30日

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  • Lin Peng,
  • Qian Wang,
  • Qin Wu

摘要

As digital technologies significantly reshape firms’ competitive advantages, digitalization may serve as a response of foreign subsidiaries to the liability of foreignness (LOF), a topic that remains underexplored. Based on two-wave survey data from 118 foreign subsidiaries in China, we find that the LOF faced by foreign subsidiaries is positively associated with their levels of digitalization. Furthermore, this positive association is strengthened under conditions of high market competition or environmental uncertainty. This study extends the literature on responses to LOF and the antecedents of digitalization in the era of digital globalization, offering new insights for foreign subsidiaries seeking to mitigate LOF.