Uneven gains: understanding LOF and multiculturalism impacts for immigrant and native-founded firms

Abstract Liabilities of foreignness (LOF) are salient for immigrant entrepreneurs as they establish ventures in institutional environments that may differ from that of their previous experiences. Integrating institutional theory with the knowledge-based view, we theorize and test how the multicultural features of co-founder nationality, language usage, and industry globalization may buffer LOF for immigrant-founded ventures but have distinct and even asymmetric effects for ventures with native-lead founders. Using data from the US Census Bureau’s Survey of Business Owners, we compare ventures with immigrant-lead founders and native-lead founders and find that these multicultural features are associated with higher immigrant venture performance; however, the presence of immigrant co-founders appears to extend LOF to ventures with native-lead founders, yet multilingual operations are associated with higher performance for native-founded ventures. Our findings reveal that multicultural attributes have context-dependent effects, shaping how LOF is experienced and mitigated across founder types and venture contexts.