Do Governments Favor Foreign Firms over Domestic Ones?

The long-held belief that governments favor their own country’s firms over outsiders may not hold up in today’s global business environment. Indeed, governments may actually favor foreign companies, particularly over politically weak domestic firms, according to preliminary research presented by Yasheng Huang, professor of international management at MIT’s Sloan School of Management, during a Wharton conference on Management Strategy and the Business Environment. In general, he said, the foreign privilege phenomenon seems to be more pronounced in Latin America and Eastern and Central Europe, although it exists in East Asia as well.

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