16. Distance

In the fields of strategy and international management, the term “distance” refers to the magnitude of the differences between two locations or countries in the world. Distance matters under the assumption that local companies know the local context better than foreign firms. This is the concept of the “liability of foreignness,” as originally formulated by Stephen . When firms seek to establish themselves in a location, market or country other than their own, they need to possess some kind of advantage not related to location that enables them to compete effectively against firms that possess local knowledge and familiarity.