Looking for a service opening: Building reputation by leveraging international activities and host country context

Abstract

We explore how a country’s economic openness impacts firm-level signal interpretation when stakeholders assess firm reputation, arguing that host country norms influence the reference frames of assessors. In more open economies, regional MNCs’ international activities are more valued as signals of firm quality–indicating effective cross-border deployment of ownership advantages. Latin America’s unique development trajectory has resulted in groupings of both more open and more restrictive countries, creating a valuable setting to test our theory. Further, we suggest that the positive regional MNC impact on reputation is stronger for knowledge intensive business services given high uncertainty levels in such industries.