Sustainable strategy as a lever for corporate legitimacy and long-term competitive advantage: an examination of an emerging market multinational

Abstract

Purpose The purpose of this paper is to examine the process of integrating sustainability into the corporate strategy of an emerging market multinational enterprises (EMNE) to achieve and maintain corporate legitimacy over time. The research explores how deploying a corporate sustainability strategy enhances the company’s long-term competitive relevance by creating and maintaining corporate legitimacy and transferring practices based on sustainable development goals within the organization. Design/methodology/approach The study adopts a qualitative single-case design, focusing on a corporate energy services company (Interconexión Eléctrica S.A.) operating in volatile, uncertain and turbulent environments. Findings The findings indicate that integrating sustainability into the corporate strategy enables subsidiaries to effectively meet global requirements, considering internal and external pressures. This integration also fosters the development of unique capabilities and the internalization of standards, addressing liabilities in foreign markets, thus providing a competitive advantage and safeguarding corporate legitimacy among stakeholders. Originality/value This research contributes to the international business literature by providing insights into strategy development and implementation in EMNEs. Specifically, it demonstrates how a Latin American emerging multinational enterprise (multilatina) adopts new sustainability strategies to enhance its business competitiveness. The study also offers guidance for emerging market companies on developing sustainability strategies and transferring them to subsidiaries operating in complex institutional environments. Furthermore, the research provides a rationale for governments and civil society organizations on why firms are committed to sustainability, highlighting its positive impact on firm’s competitiveness and survival in international markets.

Corporate sustainability strategy: From definitional ambiguity toward conceptual clarification

“…A significant body of research concurs that the influence exerted by a company's stakeholders serves as a critical contingency factor (e.g., Bager & Lambin, 2020; Banerjee & Bonnefous, 2011; Gomez‐Trujillo et al, 2023). This stakeholder influence straddles the line between the internal and external domains.…”

“…Epstein and Roy (2001, p. 7) were among the first to highlight that multinational enterprises (MNEs) “must decide whether they will implement a global sustainability strategy or adapt it locally” (p. 7). Similarly, Gomez‐Trujillo, Gonzalez‐Perez, and Baena‐Rojas (2023) suggest that national subsidiaries face serious pressure to comply with internal and external legitimacy requirements when implementing a CSS. However, the literature is undecided on whether MNE's sustainability strategies should focus on global sustainability aspects or whether local topics should dominate (Burritt et al, 2018).…”

Guest editorial: Multilatinas in the era of uncertainties: a trajectory of different dependencies

“…Third avenue: Sustainable strategy and corporate legitimacy – The third research avenue, Gomez-Trujillo et al (2024), examines sustainable strategies and corporate legitimacy, particularly in emerging economies. This study area is crucial for multilatinas that are deeply committed to international operations, as they must develop sustainable practices to manage liabilities arising from their emergent status and simultaneously contend with challenges inherent to their home countries.…”