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Management International Review
Published in: Management International Review 6/2012

01-12-2012 | Research Article

Political Institutional Change, Obsolescing Legitimacy, and Multinational Corporations

The Case of the Central American Banana Industry

Authors: Assoc. Prof. Marcelo Bucheli, Ph.D., Assist. Prof. Min-Young Kim, Ph.D.

Published in: Management International Review | Issue 6/2012

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Abstract

  • This paper studies the practice of integration of influential host country actors to a multinational corporation as a strategy to decrease problems of legitimacy to the foreign firm before the host country’s society.
  • By developing the concept of obsolescing legitimacy, we argue that this strategy provides legitimacy to the foreign firm only in the absence of institutional changes at the macro-political level in the host country. Once these changes take place, an alliance by the multinational to an elite or a political system no longer ruling the host country will become a liability and will generate problems of legitimacy for the multinational.
  • We illustrate our argument with the case of the US multinational United Fruit Company in Central America.
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Footnotes
1
This database provides information on security prices, return, and volume of shares traded from the NYSE, AMEX, and NASDAQ indices. From the CRSP we used the PERMNO identifier, which allows us to conduct uninterrupted time-series analysis, regardless of changes in the Committee on Uniform Security Identification Procedures (CUSIP) identifier, ticker, company name, or the Standard Industrial Classification (SIC) Code.
 
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Metadata
Title
Political Institutional Change, Obsolescing Legitimacy, and Multinational Corporations
The Case of the Central American Banana Industry
Authors
Assoc. Prof. Marcelo Bucheli, Ph.D.
Assist. Prof. Min-Young Kim, Ph.D.
Publication date
01-12-2012
Publisher
SP Gabler Verlag
Published in
Management International Review / Issue 6/2012
Print ISSN: 0938-8249
Electronic ISSN: 1861-8901
DOI
https://doi.org/10.1007/s11575-012-0141-4

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