Inverted legitimacy: Institutional theory in the Age of Multinational Platforms

Abstract

We examine the novel challenges of establishing and maintaining legitimacy in the burgeoning context of multinational platforms (MNPs). Prior organizational legitimacy research has studied conventional multinational enterprises (MNEs) that seek regulative, normative, and cognitive legitimacy for their subsidiaries in diverse foreign markets. MNPs, however, internationalize by orchestrating networks of independent complementors, rather than hierarchically controlled foreign subsidiaries. This exposes MNPs to novel legitimacy challenges and diverges in several ways from the premises and predictions of extant theorizing on MNE legitimacy. In particular, we argue that for MNP legitimacy, the liability of outsidership is more important than the liability of foreignness, and establishing regulatory legitimacy is more challenging than normative and cognitive legitimacy. We further explore how ecosystem characteristics and MNP governance choices shape the establishment and maintenance of MNP legitimacy.