The effect of implementing environmental policies and employees' environmental training in multinational companies’ legitimacy level in emerging countries

Abstract

Multinational companies face important challenges in host countries. When legitimized, these institutions may receive local communities' support and earn their right to operate. In this research we analyze the fundamental role that environmental policies play on the legitimacy perception of multinational companies established in emerging countries. We applied structural equations modelling, analyzing data of 157 experts' evaluations about 30 multinational companies which operate in South and Centre America (Latam). The results show evidence supporting the positive effect that environmental policies implementation have on multinational companies' legitimacy. The results highlight the importance of the dialogue with the local communities and the employees' environmental training when companies are trying to improve their legitimacy. The research contribution states in a major understanding of the effect of social responsibility policies in organizational legitimacy in the multinational companies' context, emphasizing the environmental commitment as a key factor for the organizational legitimacy in emerging countries. In addition, our findings provide new strategic guidelines for multinational companies’ managers to overcome the liability of foreignness.