The Color of Faults Depends on the Lens: MNCs’ Legitimacy Repair in Response to Framing by Local Governments in China

Abstract

Concerns over food safety in China not only direct public attention to negative incidents, but also trigger the government's scrutiny of implicated firms, particularly MNCs. The question of how to repair legitimacy after media coverage of negative incidents has become a critical issue for MNCs. Although the factors for MNCs’ public crises have been identified, how local contexts and mechanisms shape repair approaches remain unclear. To address this research gap, we conducted a study of Walmart China's approaches associated with two negative incidents across two regions. We found that the negative incidents can be framed differently depending on the local environment's unfavorability for MNCs. Specifically, the negative framing gave rise to varying degrees of legitimacy loss and offered different leeway for MNCs to repair their legitimacy. We also identified the varied outcomes of different repair approaches. By revealing the linkages among local context, framing, legitimacy repair, and its outcomes, our study contributes to research on MNCs’ legitimacy management under institutional complexity and underscores the China context for legitimacy maintenance. We also offer insights that advance the institutional approach to legitimacy repair in this context. Last, we reflect on the techniques for conducting qualitative research in China.

MNE post‐entry institutional strategies in emerging markets: An organizational field position perspective

“…This can effectively curtail the MNEs' possibility to deploy their otherwise preferable institutional strategies. The centrality of MNEs in EM is therefore fragile, whereby corporate wrongdoings or other legitimacy‐reducing events can initiate irreversible repositioning trajectory towards the periphery (Gifford & Kestler, 2008; Liu et al ., 2019). In sum, by viewing MNEs' field positions as dynamic, we can conceive of fields as interactive and inhabited spaces (Zietsma et al ., 2017).…”

Rethinking Qualitative Scholarship in Emerging Markets: Researching, Theorizing, and Reporting

“…Even though local firms are not keen to be the subject of research, an attractive topic to potential respondents creates the opportunity for interviews and encourages trust-based sharing (Liu, Tsui-Auch, Yang, Wang, Chen, & Wang, 2019). Relatively, non-government related organizations and people are more open to researchers and are willing to provide required data (Liu et al, 2019).…”

“…Compared with local companies, foreign-invested firms have been more receptive to cooperate with researchers as a result of transferring corporate culture in cooperating with academics (Lu et al, 2019; Tan & Nojonen, 2011). Even though local firms are not keen to be the subject of research, an attractive topic to potential respondents creates the opportunity for interviews and encourages trust-based sharing (Liu, Tsui-Auch, Yang, Wang, Chen, & Wang, 2019). Relatively, non-government related organizations and people are more open to researchers and are willing to provide required data (Liu et al, 2019).…”

“…This helps to ensure contextually relevant data collection design and analysis, as well as an outsider's input that might uncover unrecognizable insights that are embedded in local context (Ratner, 1997). Some studies have proved to benefit from the researcher's ability to speak the local language without a foreign accent and in-depth knowledge in the local context (Liu et al, 2019; Outila, Piekkari, & Mihailova, 2019; Win & Kofinas, 2019). These advantages make the research focus on ‘contextual’ consistency rather than ‘verbal’ [literal] consistency (Xian, 2008: 235).…”

“…Numerous interview tactics are recommended to ensure the trustworthiness of data collected in EMs. Informal conversations and interactions are efficient data collection approaches, which are complementary to formal interviews (Liu et al, 2019; Win & Kofinas, 2019). It has been evident that local respondents are more relaxed and willing to share deeper insights for topics discussed in informal interviews (Couper, 2019).…”