Relieving Status Anxiety: How Low-status Firms Respond to International Status-heterophilous Relationships

Abstract

Partnerships between firms from relatively high- and low-status countries are prevalent in international businesses. However, the strategic implications of such status-heterophilous relationships remain under-explored. Our study employs a construct of status anxiety to describe the concerns of firms from low-status countries regarding their low bargaining power and the sustainability of their relationship with partners from high-status foreign countries. We hypothesize that status anxiety motivates firms from low-status countries to increase their investment in technological research and development. This study is among the first to incorporate social status as a new theoretical perspective for examining international status-heterophilous associations and strategic responses.