Overcoming the Liabilities of Foreignness and Outsidership in Cultural Markets: A Case Study of HYBE’s Expansion into the U.S.

Abstract

This longitudinal single-case research investigates the strategic mechanisms employed by a cultural Multinational Enterprise to mitigate the "Liability of Foreignness" and "Liability of Outsidership" in a market characterized by significant institutional distance. Focusing on HYBE Corporation’s aggressive expansion into the United States between 2021 and 2025, the study aims to challenge traditional gravity models that predict steep "cultural discounting" for creative products and to identify how "soft" assets are transferred across borders. The research utilizes a qualitative methodology, employing pattern matching and data triangulation of corporate financial filings, legal documents, industry reports, and visual documentary evidence to trace the firm's evolution from export-based operations to deep internalization. The results reveal a definitive shift in governance from a financial holding model to operational integration via "HYBE 2.0," demonstrating that HYBE successfully transfers its "upstream" production capabilities - specifically the "K-Pop methodology" - through Wholly Owned Subsidiaries. The case of the global group KATSEYE validates that these Firm-Specific Advantages are not location-bound but can be recombined with local talent. Simultaneously, "downstream" distribution legitimacy is secured through a dual-track inorganic strategy: cross-border Mergers & Acquisitions bridge structural holes to access gatekeeper networks, while a multi-layered Strategic Partnership with Universal Music Group provides logistic scale. Furthermore, the findings demonstrate that the proprietary digital platform, Weverse, serves as a "private institutional environment" that compresses "psychic distance," allowing the MNE to internalize market transactions and capture high-margin "superfan" revenue independent of host-country intermediaries. The study concludes that sustainable success in cultural hegemonies extends the New Internalization Theory and "iBusiness" frameworks, suggesting that firms must enclose global consumers within a digital ecosystem while operationally embedding the means of production locally.