Beyond globalizing POEs and SOEs: Multilevel framing of illegitimacy attributes

• Main Authors: GOMULYA, David, TSUI-AUCH, Lai Si, HUANG, Dongdong
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2017
• Subjects: International Business; Strategic Management Policy
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/5845
• Institution: Singapore Management University

This paper addresses an important but under-theorized topic by developing a socio-cognitive model to explain illegitimacy concerns associated with politically-connected firms when undertaking overseas strategic options, and to identify firm actions to mitigate such concerns. We go beyond the existing literature’s focus on SOEs by including privately-owned firms into our theorization. Specifically, we offer propositions to explain how multiple-level framing by host country interest groups in terms of state-centeredness, industry sensitivity, and a firm’s ties with its home country government trigger illegitimacy concerns in host nations. In addition, we adopt a holistic approach by theorizing contextual factors across levels (national and state-firm) that moderate the effects of relationship state- centeredness, industry sensitivity, and political ties on such illegitimacy concerns. Our model ends with an identification of counter-framing actions in terms of quantity, and priority to address illegitimacy concerns as well as the associated challenges. Our paper contributes broadly by exposing a systematic form of disadvantages stemming from the structural situation a firm is embedded in, and specifically by identifying key drivers that explain this theoretical mechanism.