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Leader and firm foreignness impacts on leader reputation in Latin America
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DOI：10.1016/j.jwb.2026.101763.png)
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Abstract
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Leaders are firms' central strategic decision-makers. Yet, the factors shaping their reputations in international settings remain poorly understood. We develop a legitimacy-based theoretical framework to extend the liability of foreignness (LOF) from the firm to the individual leader, arguing that the mechanism linking foreignness to reputation operates through behavioral incongruence; Leaders socialized in one governance environment internalize norms of authority, accountability, and stakeholder inclusion that may diverge from host-country expectations, generating legitimacy deficits that stakeholders translate into lower reputational evaluations. We examine these relationships using a sample of 175 leaders from 70 headquarters operating across 11 Latin American countries for the period 2019–2023, operationalizing foreignness as institutional difference in democratic governance, a legitimacy-relevant dimension that captures the governance norms against which leaders are locally evaluated. Our primary results reveal that leader-level foreignness consistently reduces host-country reputation, while firm-level foreignness does not exert a direct independent effect, indicating that legitimacy judgments are anchored at the person rather than inherited from the employing organization. When multiple forms of foreignness co-exist, however, their individual negative effects are attenuated rather than compounded, identifying a boundary condition of the legitimacy mechanism. Consistent foreignness signals reduce evaluative ambiguity, allowing a cosmopolitan orientation to register as credible among increasingly sophisticated Latin American stakeholders. These findings advance LOF literature by specifying the legitimacy mechanism through which foreignness operates on individuals, demonstrate that individual-level LOF is theoretically distinct from its firm-level counterpart, and leverage Latin America's post-colonial institutional context to identify conditions associated with leader legitimacy.
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