Building social legitimacy through NGOs partnerships: evidence from micro-multinationals

Abstract

Micro-multinationals from emerging markets (mEMNEs) face significant challenges in establishing social legitimacy in foreign markets due to resource constraints and limited knowledge of local societal issues. This study examines how mEMNEs leverage partnerships with non-governmental organizations (NGOs) to develop dynamic capabilities for social innovation and, ultimately, to build social legitimacy in other emerging markets. Drawing on survey data from 143 Pakistani mEMNEs operating internationally, we find that NGO coupling positively influences the development of dynamic capabilities. These effects amplify when NGO salience and activism are high. Furthermore, social innovation mediates the relationship between NGO coupling, dynamic capabilities, and social legitimacy. Our findings extend dynamic capabilities theory into the social domain and contribute to understanding how resource-constrained multinationals from emerging markets can overcome legitimacy deficits through strategic stakeholder engagement. We also provide practical insights for managers on leveraging NGO partnerships and offer policy recommendations for facilitating cross-border social innovation initiatives.