Examining the effect of parent/subsidiary foreignness on the credibility of multinational corporations subsidiaries' environmental communication

Communicating concern for the natural environment is one way that firms gain environmental legitimacy (Bansal & Clelland, 2004; Bansal & Roth, 2000) which in turn helps provide the firm with the resources it needs to survive. However, in order for the legitimacy benefits to accrue, the communication needs to be deemed credible by the various stakeholders from whom the firm is attempting to gain legitimacy (Abrahamson & Park, 1994; Deegan & Rankin, 1996).; Environmental legitimacy is of great importance to managers of multinational corporations (MNCs) due to the size and scope of their operations and their ability to affect the natural environment in multiple locations across multiple jurisdictions (Christmann & Taylor, 2001). Since it is difficult to gain environmental legitimacy given that stakeholders are unable to observe the various, far-reaching operations of MNCs, they rely on environmental communication to attempt to gain legitimacy (Bansal & Clelland, 2004; Christmann, 2004).; Because MNCs have global stakeholders, institutional theory suggests that MNCs face institutional pressures to standardize their global environmental communication to ensure they meet the legitimacy expectations at the institutional field level (Christmann, 2004). However, this perspective may not recognize the necessity the subsidiaries of these MNCs have to be deemed legitimate within their host country, or the fact that the environmental legitimacy expectations of the local stakeholders may differ from those of the parent firm and differ among countries. Autonomous MNC subsidiaries often are more dependent upon the local environment for the resources they need to survive than they are to their parent firm. This dependence results in a greater need to be deemed legitimate by the local stakeholders than by the parent firm and a lower likelihood that the subsidiaries will present environmental communication that has the same level of credibility as that of the parent firm.; Differences between the internal institutional environments of the MNC and its subsidiaries caused by foreignness suggest that the institutional pressure to present credible environmental communication may not exist within subsidiaries that are foreign from their parent firms. This study attempts to measure how the credibility of subsidiary environmental communication differs compared to their parents' while also identifying the effect parent/subsidiary foreignness has on the level of credibility. To that end, 113 subsidiary web sites from 10 MNCs were content analyzed to measure their level of environmental communication credibility based on the degree of foreignness between the subsidiaries and their parent MNCs. Results suggest that foreignness will negatively affect the credibility of the communication. The empirical results were supported by post hoc interviews with subsidiary mangers responsible for the inclusion of environmental communication on their web sites.; These findings suggest that MNC global environmental legitimacy may be compromised since their subsidiaries are not following standardized levels of environmental communication. This not only affects the MNC's attempt to overcome the liability of foreignness in each host country but also puts the parent firm at risk.