Dynamic Evolution Mechanism of Internal Legitimacy of Emerging Market Enterprises after Cross-border M&A——Based on the Perspective of Social Psychology

Abstract

Abstract: This paper takes a social psychological approach to study how multinational corporations from emerging market after cross-border M&A build internal legitimacy under the unique situation of liability of origin. Applying a case study about the integration process of Lenovo's acquisition of IBM's PC business unit from 2005 to 2014, we analyze, based on instrumental, relational, and moral considerations, the interplay between the legitimation strategies of the headquarters of enterprises after cross-border M&A and subsidiary legitimacy judgement, and how the relationship between the two develops over time. From this analysis, we derive a process model of the internal legitimacy evolution of enterprises after cross-border M&A. The model highlights two important dynamics. The first is a dynamic between legitimation strategies and legitimacy judgment, with focus on how this is influenced by local subsidiary contexts. The second is a temporal dynamic, with focus on how both the legitimation strategies and legitimacy judgments evolve over time. Our model contributes to researches on legitimacy in multinational companies, integration of enterprises after cross-border M&A and legitimacy in MNC headquarters-subsidiary relationships.

Key words: cross-border M&A, internal legitimacy, dynamic evolution mechanism, the perspective of social psychology

Zhou Changbao, Wang Hongliang, Lin Runhui, Feng Zhihong, Li Kanghong. Dynamic Evolution Mechanism of Internal Legitimacy of Emerging Market Enterprises after Cross-border M&A——Based on the Perspective of Social Psychology[J]. Management Review, 2020, 32(9): 251-265.

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