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Legitimacy and Institutional Governance Infrastructure: Understanding Political Risk from a Chinese MNE Perspective

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The Changing Strategies of International Business

Part of the book series: The Academy of International Business ((AIB))

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Abstract

While the political risk associated with Chinese multinational enterprises’ (MNEs) international expansion has generated considerable interest, little attention has been paid to whether Chinese firms’ perceived level of political risk in host countries can be explained by the conventional analytical framework focusing on host-country governance infrastructure and what determines their perceived level of risk in international markets. Drawing insights from the neo-institutional theory, this chapter examines Chinese MNEs’ legitimacy in host countries and how it can shape their perceived level of political risk. Using survey data, we found that while host-country institutional governance infrastructure remains important in explaining firms’ perceived political risk, their effect diminishes when considering host-country stakeholders’ legitimacy judgement. Our findings highlight the need to conceptualize political risk from emerging-economy MNEs’ perspective.

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Notes

  1. 1.

    The sample firms are located in Beijing, Shanghai, Tianjin, Chongqing, Shandong, Guangdong, Jiangsu, Zhejiang, Fujian, Henan, Hubei, Hunan, Hebei, Heilongjiang, Yunnan and Shaanxi.

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Authors and Affiliations

  1. Alliance Manchester Business School, University of Manchester, Manchester, UK

    Xia Han

  2. Birmingham Business School, University of Birmingham, Birmingham, UK

    Xiaohui Liu

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  1. Xia Han
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Correspondence to Xiaohui Liu .

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Editors and Affiliations

  1. Birmingham Business School, University of Birmingham, Birmingham, UK

    Agnieszka Chidlow , Pervez N. Ghauri , Emma C. Gardner , Amir Qamar  & Emily Pickering , , ,  & 

  2. Management School, University of Sheffield, Sheffield, UK

    Thomas Buckley

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Han, X., Liu, X. (2019). Legitimacy and Institutional Governance Infrastructure: Understanding Political Risk from a Chinese MNE Perspective. In: Chidlow, A., Ghauri, P.N., Buckley, T., Gardner, E.C., Qamar, A., Pickering, E. (eds) The Changing Strategies of International Business. The Academy of International Business. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-03931-8_1

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