Nonmarket strategy and legitimacy in institutionally voided environments: The case of Jumia, an African e-commerce giant

Abstract

This paper examines how a newly established multinational enterprise (MNE) leverages nonmarket strategy (NMS) to deal with legitimacy problems posed by institutional voids in institutionally challenging contexts to gain legitimacy. Using a rich dataset from in-depth interviews, observations, and archival data on Jumia, an African e-commerce giant, we identify three types of institutional void (i.e., infrastructural, regulatory and legal, and cognitive cultural voids) that hinder the implementation of the e-commerce business model. We further unpack the MNE's specific NMS to validate, consolidate, and diffuse the new business model to gain legitimacy accordingly. Importantly, we theorize how MNEs, under various conditions of unstable institutional structures and mechanisms, employ NMS to achieve three kinds of legitimacy in the process—i.e., cognitive, regulative and normative legitimacies. Altogether, we integrate three prominent streams of literature in IB—NMS, institutional voids, and legitimacy literature—to build a theory on how MNEs deploy NMS to establish legitimacy in response to environmental uncertainty to validate their activities and consolidate trust by gaining political and regulatory support.