Identity, Community and Audience: How Wholly Owned Foreign Subsidiaries Gain Legitimacy in China

Academy of Management Journal, Vol. 50, No. 1, pp. 175-190, 2007

HKUST Business School Research Paper No. 07-16

18 Pages Posted: 20 Jul 2007

See all articles by Jiatao Li

Jiatao Li

Hong Kong University of Science & Technology (HKUST) - Department of Management & Organization

Jing Yu Yang

The University of Sydney

Deborah R. Yue

Independent

Abstract

Conceptualizing different foreign entry modes as distinct organizational forms, we examine how wholly owned foreign subsidiaries (WOFSs) gain legitimacy in a host country. Drawing on the institutional and ecological perspectives, we build a legitimation framework based on the ideas of identity, community, and audience. Specifically, we identify dual sources of legitimating influences for these subsidiaries in China in 1979-95: foreign direct investment (FDI) communities, and host country public opinion. Our findings reveal that the legitimation and competition dynamics of FDI communities and Chinese acceptance of the organizational form both influenced adoption of wholly owned foreign subsidiaries in China.

Suggested Citation

Li, Jiatao and Yang, Jing Yu and Yue, Deborah R., Identity, Community and Audience: How Wholly Owned Foreign Subsidiaries Gain Legitimacy in China. Academy of Management Journal, Vol. 50, No. 1, pp. 175-190, 2007, HKUST Business School Research Paper No. 07-16, Available at SSRN: https://ssrn.com/abstract=1001882

Jiatao Li (Contact Author)

Hong Kong University of Science & Technology (HKUST) - Department of Management & Organization ( email )

5473
Clear Water Bay, Kowloon
Hong Kong, PRC
852-2358 7757 (Phone)

Jing Yu Yang

The University of Sydney ( email )

University of Sydney

Deborah R. Yue

Independent

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