Navigating liabilities of foreignness in weak and challenging institutional environments: Strategies of established multinational enterprise subsidiaries in Cameroon

Abstract

This research article investigates the liability of foreignness confronting foreign firms operating in Africa and delineates strategies aimed at overcoming these challenges. While research to date have investigated the challenges experienced by firms in developed and emerging economies, our knowledge of liability of foreignness in weak and challenging environment is limited. The paper draws on in-depth interviews with executives, senior managers of sixteen multinational subsidiaries and local stakeholders in Cameroon to explore and explicate the different types of LOF that exist in Cameroon and the strategic responses in managing the liability of foreignness. Through empirical analysis, we uncover a spectrum of hurdles, and categorise different types of LOF; cognitive, normative and regulative. Facing these challenges, we find that MNE subsidiaries use Influence, Compromise and Avoid approaches to effectively mitigate the liabilities. The study contributes to both theoretical understanding and managerial practice, shedding light on the diverse challenges and actionable approaches for MNE subsidiaries in weak and challenging environments.