Internal or External Legitimacy: Which Do Overseas Subsidiaries of Multinational Enterprises Choose?

This study focuses on the choice of internal and external legitimacy of multinationals overseas subsidiaries by reviewing literatures and using institutional perspective. Due to a dual identity of multinationals overseas subsidiaries-they are not only influenced by the external legitimacy of the host country but also by the internal legitimacy of the company, they often have to confront with the conflict between internal and external legitimacy. In terms of the five factors that impact on the choice of internal and external legitimacy, this study develops a framework of the choice of internal and external legitimacy of overseas subsidiaries, which bases on some relevant assumptions. Finally, this study provides some suggestions for the local government and the overseas subsidiaries, and develops the outbound investment theory and relevant theories of new institutional economics.