In search of sustainable legitimacy of private firms in China

Abstract

PurposePrivate firms in China are like the third child in a family, constantly struggling to establish their position in an environment favoring their state-owned and collective siblings. The purpose of this paper is to discover some long-term-oriented legitimacy building strategies for private firms in China.Design/methodology/approachThis paper examines the effect of both internal and external institutional factors on long-term legitimacy for private enterprises. The authors integrate stakeholder perspective and institutional theory to provide a framework of building sustainable legitimacy.FindingsThe authors’ framework delineates that a private company can build sustainable legitimacy through catering long-term legitimacy conferring to constituents such as customers, social responsibility and patriotism in the external institutional environment.Practical implicationsThe authors’ framework further indicates how private firms could leverage internal institutional environment through developing appropriate mission, culture, leadership and human resources practices in conformity to the demands of constituents for gaining long-term legitimacy.Originality/valueThis paper is the first to address the short-term nature of legitimacy building strategies proposed in the past literature. In addition, it is also the first attempt to explore the multiplicity in legitimacy in China in search of long-term legitimacy building approaches.