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

Xiao-xiao Liu, Lai Si Tsui-Auch, Jun Jie Yang, Xueli Wang, Aihua Chen and Kai Wang

Management and Organization Review, 2019, vol. 15, issue 2, 429-458

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.

Date: 2019
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