BUS 410 – Assignment 9
Review Questions.
Special Note: Questions 1-10 are based on Chapter 10
1. What does the institution-based view indicate about how a firm should deal with the
liability of foreignness? The institution-based view suggests that firms need to undertake
actions deemed legitimate and appropriate by the various formal and informal institutions
governing market entries. What does the resource-based view suggest? The resource-
based view argues that foreign firms need to deploy overwhelming resources and
capabilities so that, after offsetting the liability of foreignness, there is still some
competitive advantages.
2. What are some of the location-specific advantages found in agglomeration, the clustering
of economic activities in a concentrated area? Location-specific advantages will consist
of the most favorable locations in certain countries, that may give firms operating there
some of the following advantages. Efficiency seeking firms will single out the most
efficient locations featuring a combination of scale economies and low-cost factors.
Whereas, Innovation seeking firms might target countries and regions renowned for
generating world-class innovations. Market seeking firms go after countries that offer
strong demand for their products and services. And last, we may see that natural resource
seeking firms may make a location decision based on the availability of certain resources
that are found in the particular foreign locations.
