A firm's legitimacy becomes a critical issue during an organizational crisis. Blending social identity theory (SIT) and institutional theory, I explain why legitimacy is more difficult
to maintain for foreign firms than domestic firms. Specifically, I argue that foreign firms are likely to suffer a greater loss in legitimacy from an organizational crisis because of their
legitimacy characteristics and foreign identity. In building the discussion about foreign firms' legitimacy characteristics, I argue that foreign firms face severe restrictions in
establishing cognitive legitimacy due to constituents' identity-based bias toward foreign firms. As a result, domestic firms and foreign firms develop differing properties of legitimacy. When
an organizational crisis strikes a foreign firm, this ex ante legitimacy property and the magnified foreign identity reinforce each other to result in more damage to legitimacy for foreign
firms. Moreover, an organizational crisis that strikes a foreign firm is likely to have a stronger negative spillover effect on other foreign firms within the same industry. The proposition
and hypotheses in this study were empirically tested using the recall data of 10 automakers in the US automobile industry between 2006 and 2013. The legitimacy of a firm was measured using
two constructs from prior studies: tenor of media and volume of media (Pollock & Rindova, 2003). A total of 15,019 newspaper articles were analyzed using Linguistic Inquiry and Word Count
(LIWC) software to estimate tenor of media, and additional 469 news articles were used to estimate volume of media. Lastly, this study employs GEE to test the ten hypotheses. The results
suggest that foreign firms are indeed at a higher risk of losing legitimacy not only from their own crises but also other foreign firms' crises. More specifically, an organizational crisis
results in a harsher legitimacy setback for a foreign firm than a domestic firm. Furthermore, when a foreign firm faces a crisis, its negative effects seem to spread only to other foreign
firms, whereas domestic firms may even benefit from the foreign firm's crisis. There was no negative spillover affecting domestic firms either from a foreign firm's recall or domestic firm's
recall. Therefore, the empirical results point to the existence of the identity-based liability of foreignness. / A Dissertation submitted to the Department of Entrepreneurship, Strategy, and Information Systems in partial fulfillment of the requirements for the degree of
Doctor of Philosophy. / Fall Semester, 2014. / July 24, 2014. / institutional theory, legitimacy, liability of foreignness, product recall, social identity theory, spillover / Includes bibliographical references. / Bruce T. Lamont, Professor Directing Dissertation; Chad H. Van Iddekinge, Committee Member; David Maslach, Committee Member.
| Identifer | oai:union.ndltd.org:fsu.edu/oai:fsu.digital.flvc.org:fsu_252881 |
| Contributors | Ro, Sangbum (authoraut), Lamont, Bruce T. (professor directing dissertation), Lee, Ruby P. (university representative), Van Iddekinge, Chad H. (committee member), Maslach, David (committee member), Florida State University (degree granting institution), College of Business (degree granting college), Department of Management (degree granting department) |
| Publisher | Florida State University, Florida State University |
| Source Sets | Florida State University |
| Language | English, English |
| Detected Language | English |
| Type | Text, text |
| Format | 1 online resource (123 pages), computer, application/pdf |
| Rights | This Item is protected by copyright and/or related rights. You are free to use this Item in any way that is permitted by the copyright and related rights legislation that applies to your use. For other uses you need to obtain permission from the rights-holder(s). The copyright in theses and dissertations completed at Florida State University is held by the students who author them. |
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