Liability of foreignness in public-private partnerships: The case of project finance investments

The liability of foreignness (LOF) are the costs incurred by MNCs of operating in unfamiliar host environnents. Most LOF research assumes the MNC enters the foreign market alone. In this paper, we test whether MNCs that partner with a host government can overcome LOF based on a sample of project finance investments; a type of public-private partnership. We also test the moderating effects of the size of the project finance investment and whether the investment is transferred to a third party. Our findings have implications for scholars as well as managers and institutions involved in project finance investments.