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The interplay between HQ legitimation and subsidiary legitimacy judgments in HQ relocation : A social psychological approach

Author

Listed:
  • Julia Balogun

    (University of Liverpool)

  • Kathryn Fahy

    (LUMS - Lancaster University Management School - Lancaster University)

  • Eero Vaara

    (Aalto University, EM - EMLyon Business School)

Abstract

This paper marks a departure from the focus on external stakeholders in much research on legitimacy and multinational corporations, adopting a social psychological approach to study how MNCs build internal legitimacy for controversial decisions with their subsidiaries. We explore this through a longitudinal, real-time qualitative case study of a regional office relocation, since office relocations represent rare yet significant strategic decisions. We analyze the interplay between the legitimation strategies of senior managers and subsidiary legitimacy judgments, based in instrumental, relational, and moral considerations, and how the relationship between the two develops over time. From this analysis, we derive inductively a process model that reveals the dynamics of building internal legitimacy with subsidiaries, and how an MNC moves on even in the absence of full legitimacy, when dealing with controversial MNC decisions. The model highlights two important dynamics. The first is a dynamic between legitimation strategies and legitimacy judgments and how this is influenced by local subsidiary contexts. The second is a temporal dynamic in how both the legitimation strategies and legitimacy judgments evolve over time. Our model contributes to research on legitimacy in MNCs, what we know about tensions that characterize MNC–subunit relationships, and research on headquarters relocation.

Suggested Citation

  • Julia Balogun & Kathryn Fahy & Eero Vaara, 2019. "The interplay between HQ legitimation and subsidiary legitimacy judgments in HQ relocation : A social psychological approach," Post-Print hal-02312123, HAL.
    • Handle: RePEc:hal:journl:hal-02312123
    DOI: 10.1057/s41267-017-0122-8
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    Citations

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    Cited by:

    1. Cuervo-Cazurra, Alvaro & Dieleman, Marleen & Hirsch, Paul & Rodrigues, Suzana B. & Zyglidopoulos, Stelios, 2021. "Multinationals’ misbehavior," Journal of World Business, Elsevier, vol. 56(5).
    2. Díez-Martín, Francisco & Miotto, Giorgia & Cachón-Rodríguez, Gabriel, 2022. "Organizational legitimacy perception: Gender and uncertainty as bias for evaluation criteria," Journal of Business Research, Elsevier, vol. 139(C), pages 426-436.
    3. Magnani, Giovanna & Gioia, Denny, 2023. "Using the Gioia Methodology in international business and entrepreneurship research," International Business Review, Elsevier, vol. 32(2).
    4. Elsahn, Ziad & Earl, Anna, 2022. "Alternative ways of studying time in qualitative international business research: A review and future agenda," Journal of International Management, Elsevier, vol. 28(3).
    5. Johann Fortwengel, 2021. "The formation of an MNE identity over the course of internationalization," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(6), pages 1069-1095, August.
    6. Ishva Minefee & Marcelo Bucheli, 2021. "MNC responses to international NGO activist campaigns: Evidence from Royal Dutch/Shell in apartheid South Africa," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(5), pages 971-998, July.
    7. Birgitte Grøgaard & Helene Loe Colman & Inger G Stensaker, 0. "Legitimizing, leveraging, and launching: Developing dynamic capabilities in the MNE," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 0, pages 1-21.
    8. Stendahl, Emma & Tippmann, Esther & Yakhlef, Ali, 2022. "Practice creation in multinational corporations: Improvisation and the emergence of lateral knowledge," Journal of World Business, Elsevier, vol. 57(3).
    9. Marty Reilly & Esther Tippmann & Pamela Sharkey Scott, 2023. "Subsidiary closures and relocations in the multinational enterprise: Reinstating cooperation in subsidiaries to enable knowledge transfer," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 54(6), pages 997-1026, August.
    10. Emma Stendahl & Svante Schriber & Esther Tippmann, 2021. "Control changes in multinational corporations: Adjusting control approaches in practice," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(3), pages 409-431, April.
    11. Lars Håkanson, 2021. "The death of the Uppsala school: Towards a discourse-based paradigm?," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(7), pages 1417-1424, September.
    12. Tina C Ambos & Sebastian H Fuchs & Alexander Zimmermann, 2020. "Managing interrelated tensions in headquarters–subsidiary relationships: The case of a multinational hybrid organization," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(6), pages 906-932, August.
    13. Hoorani, Bareerah Hafeez & Plakoyiannaki, Emmanuella & Gibbert, Michael, 2023. "Understanding time in qualitative international business research: Towards four styles of temporal theorizing," Journal of World Business, Elsevier, vol. 58(1).
    14. Minbaeva, Dana & Muratbekova-Touron, Maral & Nayır, Dilek Zamantılı & Moreira, Solon, 2021. "Individual responses to competing institutional logics in emerging markets," International Business Review, Elsevier, vol. 30(4).
    15. Biyue Lin & Shoukat Iqbal Khattak & Bei Zhao, 2021. "To Relocate Or Not to Relocate: A Logit Regression Model of Factors Influencing Corporate Headquarter Relocation Decision in China," SAGE Open, , vol. 11(3), pages 21582440211, July.
    16. Carol Hsu & Jae-Nam Lee & Yulin Fang & Detmar W. Straub & Ning Su & Hyun-Sun Ryu, 2022. "The Role of Vendor Legitimacy in IT Outsourcing Performance: Theory and Evidence," Information Systems Research, INFORMS, vol. 33(1), pages 337-361, March.
    17. Aleksi Eerola & Arjen H. L. Slangen, 2022. "A Review of International Management Research on Corporate Taxation," Management International Review, Springer, vol. 62(5), pages 643-680, October.
    18. Gabriel Cachón‐Rodríguez & Alicia Blanco‐González & Camilo Prado‐Román & Francisco Diez‐Martin, 2021. "Sustainability actions, employee loyalty, and the awareness: The mediating effect of organization legitimacy," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(7), pages 1730-1739, October.
    19. Birgitte Grøgaard & Helene Loe Colman & Inger G Stensaker, 2022. "Legitimizing, leveraging, and launching: Developing dynamic capabilities in the MNE," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(4), pages 636-656, June.
    20. Helene Loe Colman & Birgitte Grøgaard & Inger G. Stensaker, 2022. "Organizational identity work in MNE subsidiaries: Managing dual embeddedness," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(9), pages 1997-2022, December.

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