Abstract
Exiting literature suggests that the international exposure of managers frequently influence top management team (TMT) to lead firms to source technological knowledge in foreign countries. Extant research, however, has not examined the role of foreign managers and foreign board members, whose knowledge can influence in TMT decision to setup international R&D units. However, because of the liability of foreignness and the insufficiency of local knowledge, foreign managers and foreign board members may find it difficult to integrate themselves into the institution-void business environments, resulting in a distortion in the individual cognitive structure and in risk perceptivity. Therefore, I argue that the ratio of foreign managers and ratio of foreign board member negatively correlates to the probability to invest in international R&D units by emerging-market firms.
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