How Do International Joint Ventures Build Legitimacy Effectively in Emerging Economies? CSR, Political Ties, or Both?

Bai, Xuan; Chang, Jeanine; Li, Julie Juan

doi:10.1007/s11575-019-00382-x

Cited by 54 publications

(66 citation statements)

References 102 publications

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“…Our results indicate that subunits vary their supplier development strategies to manage their legitimacy and mitigate perceived political risk. Third, our findings contribute further to the growing strategic management and international business literature on the strategic actions taken by foreign subunits to address host country political risk by managing political legitimacy interests (Bai, Chang, & Li, 2019; Caussat, Prime, & Wilken, 2019; Klossek, Linke, & Nippa, 2012; Zhao, 2012). We highlight several different conceptual archetypes of supplier development practices that strategically “fit” with subunits' need to manage their legitimacy with the host country government.…”

Section: Introductionsupporting

confidence: 62%

“…Finally, our third contribution is to the legitimacy‐based view of political risk by adding a SC/OM perspective to strategic and international business research that investigates foreign subunits' attempts to mitigate political risk by managing their legitimacy in the host country (Bai et al, 2019; Banerjee & Venaik, 2018; Caussat et al, 2019; Stevens et al, 2016; Zhao, 2012). While the international business and strategy literature focuses on corporate legitimacy‐seeking strategies, we found a strategy—supplier development—that is focused on SC/OM (see Figure 1).…”

Section: Discussionmentioning

confidence: 99%

“…Firms can gain political legitimacy by aligning their actions with the government's interests (Marquis & Qian, 2014). According to the strategic approach, a foreign subunit can prove itself in the host country by enhancing its political legitimacy, thereby, earning the endorsement of the host government and reducing its exposure to political risk (Bai et al, 2019; Kostova & Zaheer, 1999). We note that the institutional and strategic approaches to legitimacy offer two complementary ways of understanding how firms can achieve legitimacy (Suchman, 1995).…”

Section: Theoretical Backgroundmentioning

confidence: 99%

“…To obtain legitimacy though CPA, subunits can use either reactive strategies that entail simply complying with host country policies or proactive strategies that attempt to influence them (Caussat et al, 2019; de Villa et al, 2019). Foreign subunits can enhance their political legitimacy and decrease political hazards by developing ties with government officials, (Bai et al, 2019), making financial contributions to political parties, (Banerjee & Venaik, 2018) or engaging with host and home governments, for example (Caussat et al, 2019). They can also gain political legitimacy by demonstrating the positive impact of their CSR initiatives (Bai et al, 2019; Beddewela & Fairbrass, 2016; Marquis & Qian, 2014; Shirodkar, Beddewela, & Richter, 2018; Zhao, 2012).…”

Section: Theoretical Backgroundmentioning

confidence: 99%

“…Foreign subunits can enhance their political legitimacy and decrease political hazards by developing ties with government officials, (Bai et al, 2019), making financial contributions to political parties, (Banerjee & Venaik, 2018) or engaging with host and home governments, for example (Caussat et al, 2019). They can also gain political legitimacy by demonstrating the positive impact of their CSR initiatives (Bai et al, 2019; Beddewela & Fairbrass, 2016; Marquis & Qian, 2014; Shirodkar, Beddewela, & Richter, 2018; Zhao, 2012). CSR initiatives such as corporate philanthropy (Han et al, 2018) and corporate community involvement (Baik & Park, 2019) demonstrate goodwill while pursuing the underlying goal of currying political favor (Kostova & Zaheer, 1999; Scherer & Palazzo, 2007).…”

Section: Theoretical Backgroundmentioning

confidence: 99%

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The influence of perceived host country political risk on foreign subunits' supplier development strategies

Charpin

Powell

Roth

2020

J of Ops Management

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Recent protectionist trends (e.g., trade wars, Brexit) have challenged the stability of the global supply chains (SCs) of multinational corporations. While the SC and operations management (SC/OM) literature has examined how such sources of political risk influence strategic SC/OM decisions at the global level, we know little about how host country political risk influences the SC/OM practices of foreign subunits at the local level. We conducted an exploratory, multiple‐case study of western subunits operating in China to investigate whether managers of foreign subunits in a host country perceive political risk; and if so, how they adapt their SC/OM strategic choices to reduce its impact on their subunits. Our empirical findings suggest that variations in political risk perceptions create different political legitimacy goals that subunits attempt to meet by adapting their supplier development strategies. We induct a process model and identify three archetypes of supplier development strategy—self‐centered, collaborative, and voluntary—adopted by subunits to shape their legitimacy and mitigate political risk. We contribute to the SC/OM literature by theorizing SC/OM managers' perceived political risk, showing how foreign subunits may use supplier development to influence how the host government views them, and by complementing traditional “corporate” legitimacy‐seeking strategies with new “SC/OM” legitimacy‐seeking strategies.

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Section: Introductionsupporting

confidence: 62%

Section: Discussionmentioning

confidence: 99%

Section: Theoretical Backgroundmentioning

confidence: 99%

Section: Theoretical Backgroundmentioning

confidence: 99%

Section: Theoretical Backgroundmentioning

confidence: 99%

See 3 more Smart Citations

The influence of perceived host country political risk on foreign subunits' supplier development strategies

Charpin

Powell

Roth

2020

J of Ops Management

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Striving for sustainable development: The impact of corporate social responsibility on corporate performance of Chinese manufacturing multinationals in Africa

Zhang

2023

Sustainable Development

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The Forum of China‐Africa Cooperation benefits both China and Africa in tackling development issues. Increased foreign direct investment from China can specifically help to reduce Africa's struggles to meet its 2030 sustainable development goals. Due to insufficient global investment experience and stigmatization, Chinese multinational companies (MNCs) often experience unsatisfactory corporate performance in host countries. A successful strategy to mitigate stigma and be perceived by stakeholders as “legitimate” is through corporate social responsibility (CSR) engagement. Exploring how Chinese MNCs in Africa can achieve desirable corporate performance through CSR engagement is important to promote mutual benefits for both Chinese MNCs and African societies. This study aimed to contribute to emerging market CSR literature by examining the relationship between CSR engagement and corporate performance of Chinese manufacturing MNCs operating in Africa, with emphasis on moral legitimacy as a mediating factor and institutional distance as a moderating factor. Survey data were collected between June 2019 and January 2020 from a sample of 203 Chinese manufacturing MNCs subsidiaries in Africa. By using hierarchical regression and bootstrapping, we find that the positive relationship between CSR engagement and corporate performance is fully mediated by moral legitimacy gaining. This mediation effect is moderated by institutional distance. The results enrich our understanding of how Chinese manufacturing MNCs' corporate performance can be enhanced by addressing social challenges and promoting sustainable investment cooperation with African countries. These results are important for Chinese MNCs and authorities, as well as African public authorities when designing policies to promote China‐Africa sustainable investment cooperation.

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Uncovering the nonmarket side of internationalization: the Belt and Road Initiative and Chinese firms’ CSR reporting quality

2022

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How Do International Joint Ventures Build Legitimacy Effectively in Emerging Economies? CSR, Political Ties, or Both?

Cited by 54 publications

References 102 publications

The influence of perceived host country political risk on foreign subunits' supplier development strategies

The influence of perceived host country political risk on foreign subunits' supplier development strategies

Striving for sustainable development: The impact of corporate social responsibility on corporate performance of Chinese manufacturing multinationals in Africa

Uncovering the nonmarket side of internationalization: the Belt and Road Initiative and Chinese firms’ CSR reporting quality

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