Internal Legitimacy Crises: The Roles of the Regulatory Focus and Relational Social Capital of Headquarters and Subsidiaries
This paper highlights the importance of internal legitimacy as well as the motivational orientations of headquarters and subsidiaries for the functioning of MNEs. Internal legitimacy management is crucial for building relational social capital. We propose that legitimacy crises are particularly likely to occur in cases of goal incongruence between headquarters and subsidiaries.
We postulate that organizations with a promotion-oriented institutional logic are concerned by the absence of pragmatic legitimacy processes. In contrast, given their aim of protecting the status quo, prevention-oriented institutional logic MNEs are concerned about the absence of moral legitimacy.