Legitimizing actions in dependence-asymmetry relationships: A comparison between Chinese and Western firms

Abstract

To overcome the negative outcomes of dependence, disadvantaged parties in exchange relationships characterized by dependence asymmetry seek effective strategies to rebalance their dependence. Obtaining legitimacy in the eyes of the advantaged party through legitimizing actions is a novel way to influence the advantaged party's exchange and conflict management approaches toward the disadvantaged party. However, a disadvantaged party's preference between external and internal legitimizing actions varies across cultures because culture influence the character if the relationship management preference. Drawing on the individualism–collectivism framework, we argue that facing dependence asymmetry, a Chinese firm is more likely to seek legitimacy through external legitimizing actions than a Western firm. In contrast, a Western firm is more likely to seek legitimacy through internal legitimizing actions than a Chinese firm when facing dependence asymmetry. We also predict a positive relationship between legitimizing actions, both external and internal, and the disadvantaged party's performance. We test these hypotheses by collecting dyadic survey data of exchange partners in Chinese-owned and Western-owned firms. The results support most of our predictions. Theoretical and managerial implications for partners in dependence-asymmetric relationships are discussed based on these findings.