Follow the rules: How SMEs that are embedded in the concern of an MNE manage legitimacy

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To generate more knowledge on legitimacy management of SMEs, this research investigated how SMEs manage their legitimacy. In addition, this research focused on a specific type of SMEs: SMEs that are embedded in a larger concern. The research was a multiple case study with a qualitative approach. The data collection included document analysis and six semistructured interviews. The gathered data was analyzed by means of a template analysis. The cases of the research were four operating companies (SMEs) that were embedded in the concern of an MNE that operates in the construction industry. The legitimacy of the MNE and its operating companies was affected by the nitrogen crisis. The results of this research demonstrated two actions of the operating companies that helped them to maintain the legitimacy of their work practices. Firstly, the operating companies were actively adapting their organizational practices to the new societal expectations in order to meet the nitrogen standards. Secondly, the operating companies provided misleading information in their calculations to get their building permits granted. These two actions are similar to legitimation strategies of isomorphic adaptation and strategic manipulation. However, this research indicated that SMEs have a different application of the strategic manipulation strategy. In addition, this research demonstrated that the guidance and sharing of knowledge of the MNE contributed to the effectiveness of legitimacy management of the operating companies. Also, the operating companies were not confronted with difficult decisions related to conformance to pressures of the concern which conflicted with their own environment
Faculteit der Managementwetenschappen