How institutional advantage influences overseas subsidiary performance: the mediating role of media legitimacy

Purpose This study aims to reevaluate the impact of institutional advantages on the media legitimacy and performance of Chinese multinational enterprises’ (MNEs) overseas subsidiaries in developed countries amid rising techno-nationalism. It investigates how these advantages, initially beneficial, may transform into legitimacy disadvantages due to negative media portrayals. Design/methodology/approach Using institutional theory, the research explores the period from 2008 to 2020, focusing on Chinese MNEs investing in developed countries. It examines the relationship between institutional advantages, media legitimacy and performance through empirical analysis, considering the moderating effects of institutional distance and social trust. Findings Results indicate a significant negative correlation between institutional advantages and the media legitimacy of Chinese MNEs’ overseas subsidiaries, which is detrimental to improving subsidiary performance. This negative impact is amplified by greater institutional distance between China and the host country. While the low legitimacy in the host country can negatively influence subsidiary performance, higher social trust levels within the host country help mitigate this adverse effect, reducing the extent to which negative media legitimacy translates into performance declines. Originality/value The paper extends the discourse on firm-specific advantages and subsidiary survival by incorporating the role of media legitimacy under techno-nationalism. It illustrates how institutional advantages can paradoxically engender legitimacy challenges in foreign markets, contributing new insights into the strategic management of international firms under complex global dynamics.