Legitimacy Beyond Borders: Indian Software Services Firms in the United States, 1984 – 2004

Abstract

The emergence of developing country multinational companies (DMNCs) provides us an opportunity to redress the neglect of the process of cross-border legitimation. We argue that DMNCs face three challenges to legitimation in developed country markets—liability of foreignness, liabilities of origin, and liability of advantage. By means of a qualitative inquiry into the cultural-cognitive legitimation of Indian software services firms in the United States over the course of two decades, we identify five core legitimation dynamics that explain how DMNCs respond to the aforesaid challenges and acquire legitimacy in developed country markets. Our study suggests that global strategy is not merely about deploying competitive advantage, but is also about overcoming competitive disadvantage as reflected, say, in the absence of host country legitimacy.