THE LEGITIMACY BUILDING OF SMEs FOR BUSINESS DEVELOPMENT IN THE EMERGING ECONOMIES

Abstract

To do business in the emerging economies where the institutions are undeveloped, the proactively legitimacy establishment of firms will make their business conduction naturally and meaning and allow the firms to get business resources more quickly. The purpose of this study was to research the legitimacy building of SMEs when developing business in the emerging economies

Adopted an inductive approach and multiple case study method, this study proposed the possible legitimacy needs and the legitimacy-gaining strategies based on literature and examined the results of similarity and differences through semi-structured interviews. The interviews case companies were the Finnish cleantech SMEs who have been successfully developing in the Chinese market for years.

Through the empirical interviews, it found that the exchange legitimacy and dispositional legitimacy about the trustworthiness and visibility of organizations in the local were the most fundamental and important legitimacy needs for SMEs. Relying on the technical success or references in the local market, the SMEs managed to demonstrate the value of their business in practical, which then gaining legitimacy in the mind of stakeholders. Particularly, it also found that all of the interviewed SMEs had established physical offices presenting in emerging countries.