MNEs’ Legitimation Strategies and the Role of Institutional Distance in Sub-Saharan Africa: The Case of Electricity Provision

40 Pages Posted: 30 Nov 2015

See all articles by Matilde D'Amelio

Matilde D'Amelio

Polytechnic University of Milan - Department of Management, Economics and Industrial Engineering

Paola Garrone

Politecnico di Milano

Lucia Piscitello

Politecnico di Milano - Dipartimento di Ingegneria gestionale

Date Written: November 29, 2015

Abstract

Sub-Saharan Africa is experiencing epochal changes, arguably becoming the new frontier for business. Multinational enterprises (MNEs) wishing to operate there need to adopt legitimation strategies, showing their social and long-term commitment with local context. We argue that, a viable approach would be promoting access to electricity for local population. However, MNEs will be more able to implement this strategy whenever from countries institutionally closer, as they are more likely to possess capabilities and knowledge required to deal with local environments. An econometric analysis is performed on foreign investments undertaken in Sub-Saharan Africa from 2005 to 2011. Results support the positive role of institutional closeness in promoting access to electricity, but only when considering formal institutions, while similarity between informal institutions appears to be a barrier.

Keywords: Institutions, legitimacy, sub-Saharan Africa, access to electricity, distance

Suggested Citation

D'Amelio, Matilde and Garrone, Paola and Piscitello, Lucia, MNEs’ Legitimation Strategies and the Role of Institutional Distance in Sub-Saharan Africa: The Case of Electricity Provision (November 29, 2015). Available at SSRN: https://ssrn.com/abstract=2696649 or http://dx.doi.org/10.2139/ssrn.2696649

Matilde D'Amelio (Contact Author)

Polytechnic University of Milan - Department of Management, Economics and Industrial Engineering ( email )

Via Lambruschini 4C - building 26/A
Milano, 20156
Italy

Paola Garrone

Politecnico di Milano ( email )

piazza Leonardo da Vinci 32
Milano, 20133
Italy
+39-02-23992742 (Phone)

Lucia Piscitello

Politecnico di Milano - Dipartimento di Ingegneria gestionale ( email )

20113 Milan, Milano
Italy

HOME PAGE: http://www.dig.polimi.it/eng/comunita/cl.php?id=51

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