International business research has long focused on the liability of foreignness (LOF), emphasizing the costs and disadvantages faced by firms operating abroad. However, recent studies highlight the asset of foreignness (AOF), acknowledging that foreignness can also generate unique advantages. This study adopts an identity-based perspective to examine how multinational subsidiaries manage the duality of foreignness—navigating both liabilities and assets—in complex and heterogeneous environments. Using a comparative case study of sixteen foreign subsidiaries in Cameroon, the study explores the internal attributes of foreignness—values, culture, network position, and image—and how these interact with local perceptions to produce LOFs or AOFs. LOFs arise when there is misalignment between internal attributes and local expectations, leading to operational costs, relational frictions, and heightened legitimacy standards. In contrast, AOFs emerge when internal attributes align with stakeholder perceptions, enabling innovation, resource access, and local support. The findings identify four strategic approaches—local alignment, expectation shaping, stakeholder balancing, and institutional buffering—used to manage this duality. By linking identity, legitimacy, and strategic behavior, this study contributes to a more nuanced understanding of foreignness and advances theory on how subsidiaries engage with institutional complexity in host-country environments.