Journal of Management Information Systems

Volume 40 Number 4 2023 pp. 1202-1236

Foreignness Liability of Mobile App Startups: Examining Performance in the Context of Consumer and Investor Cultural Distances

Soh, Franck and Grover, Varun


Mobile platforms provide important entrepreneurial opportunities by facilitating access to a global market composed of more than a hundred countries. These opportunities are crucial for mobile app startups as they seek to reach a wider audience and accelerate growth. Nevertheless, performing in foreign countries is challenging as mobile app startups face a “foreignness liability” since they are competing against complementors (i.e., app developers) who have experience in their domestic market. We offer a research model that assesses the impact of cultural distance on the app-level performance of mobile app startups in foreign countries. We hypothesize the moderating effects of investor-consumer cultural distance and environmental characteristics within foreign countries. We test the model using a dataset of over 550 mobile app startups operating on the iOS platform. Our findings support our hypotheses and provide insights into whether mobile platforms are level playing fields. Our study sheds light on the interactions between a startup and its investors’ cultural distances highlighting configurations of cultural distance that are beneficial for app performance in foreign countries when the environment is stable or uncertain.

Key words and phrases: Mobile platforms, startups, IT investors, internationalization, cultural distance, competitive environments, online platforms