Building Different Levels of Legitimacy in Internationalisation: Subsidiary – Civil Society Nexus in Institutional Void

Drawing on empirical examination of six European MNE-subsidiaries, using a multiple-case method and 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) 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 that isomorphism perspective of legitimacy cannot explain the complexity of subsidiary legitimization in institutional void. Because, subsidiaries not only earn acceptance in institutional context, they also create and co-create image, endorsement, and synergy. We thus combine institutional isomorphism and institutional innovation perspective in legitimization and conclude that subsidiaries strategic endeavors generate various levels of legitimacy, as an output; not just acceptance level only. It is hard to separate legitimacy and efficiency as strategic outcomes, because subsidiaries fill up institutional voids by institutional innovation and create operational efficiency as well as legitimacy in market and society. We conceptualize the development of different levels of legitimacy by ‘spiral metaphor’ and combine isomorphism perspective with institutional innovation, and business model-fit to illustrate how they influence legitimacy and efficiency development.