Marcelo Bucheli from University of Illinois at Urbana–Champaign
This event is part of the Management Seminar Series series.
Location:
Gerri C. LeBow Hall208
3220 Market Street
Philadelphia, PA 19104
Registration Option:
Plain language summary: Multinational corporations face more challenges than their domestic counterparts when trying to legitimize their operations vis a vis a host country’s society. This is particularly salient in the case of MNCs from Western economic powers operating in underdeveloped and emerging economies where a history of colonialism, unequal economic relations, or interventionism have left a legacy of distrust towards those firms. Opponents of Western MNCs have repeatedly used this history to delegitimize these firms’ operations and to subsequently legitimize hostile actions against them, including outright expropriation. One strategy developed by multinationals to neutralize potential challenges to their legitimacy has been to establish connections with influential members of the host country’s elites. We study how this strategy fares in host countries that are undergoing dramatic political and economic changes, aiming show when this strategy is effective and when it can backfire. We first argue that overtly maintaining open connections with an elite that is viewed as a relic of an illegitimate past can become a liability. And, second, that highly visible connections are more likely to become a liability in times of political and social change than less visible ones. We illustrate our arguments with a long-term study of the political strategies followed by American telecommunications and oil multinationals operating in Chile.