Building Different Levels of Legitimacy in Internationalisation: Subsidiary-civil society nexus in Institutional void

Drawing on empirical examination of six European MNE-subsidiaries and using a multiple-case method & process analysis, this paper investigates the nexus between subsidiaries & civil society actors in institutional void that affect legitimacy development. Study finds four different levels (i.e. degree) of legitimacy- acceptance, image, endorsement, and synergy (acceptance + efficiency) that subsidiaries earn, develop, or co-develop in collaboration with CS actors in internationalization. Our study brings a new insight on legitimacy theory in international management in a way that isomorphism perspective of legitimacy cannot explain the complexity of subsidiary legitimization in institutional void. This is because subsidiaries not only earn acceptance by complying to institutional context, they also create and co-create image, endorsement and synergy by strategic initiatives. We thus combine institutional isomorphism and institutional innovation perspective in legitimization and conclude that subsidiaries strategic endeavours generate various levels of legitimacy as an output; not just acceptance level only. It is although difficult to separate legitimacy and efficiency as an intermingled strategic outcome because subsidiaries fill up institutional void by institutional innovation and create operational efficiency as well as legitimacy in market and society. We therefore conceptualize the development of different levels of legitimacy using a ‘spiral metaphor’ and combine isomorphism perspective with institutional innovation and business model-fit in order to illustrate how they influence legitimacy and efficiency development in institutional void context.