Non-market strategies in weak institutional environments : The case of MNE subsidiaries in Cameroon

Abstract

This study seeks to understand why and how multinational enterprise (MNE) subsidiaries use non-market strategies to establish legitimacy in weak institutional environments. By adopting an in-depth qualitative approach, we explore the non-market strategies enacted by four MNE subsidiaries operating in Cameroon. We find that MNE subsidiaries endeavour to gain legitimacy and social reputation in weak institutional environments by engaging with multiple local stakeholders through corporate social responsibility and political non-market strategies. Our findings support the previous studies on emerging African markets that the host-country government remains the most critical and challenging stakeholder. However, firms experience legitimacy risks due to their strong ties with the government during periods of political and social instability. The subsidiaries mesh social with political strategies and use them as complementary strategies for developing their social reputation and gaining social license to operate in the host market, thus mitigating social and political risks from aligning with the host government. We draw implications of these findings for research and practice.