The evolution of stigmas facing Chinese MNEs abroad: From latecomer stigma to geopolitical stigma

Abstract

This paper conceptualizes the evolution of stigma facing Chinese MNEs in Western markets. From the 1980s-early 2010s, MNEs faced “latecomer stigma” (i.e., stigma from perceived low product quality, copycat behavior, and other latecomer disadvantages) whereas at present they face “geopolitical stigma” (i.e., stigma from threatening Western economic and political leadership). After highlighting the limits of liability of origin theory to explain this shift, we draw on organizational stigma theory and a geopolitical perspective to theorize the causes and consequences of the evolution of these two stigmas. For each type, we contrast their dominant logics, audiences, bases, outcomes, and strategic responses. The shift of institutional logics in Western host markets from neoliberal globalization to neopopulist globalization fundamentally explains the evolution of the stigmas. Among other contributions, we provide a more dynamic perspective of Chinese MNEs’ legitimacy challenges abroad. We also point out that, ironically, Chinese MNEs’ strategies to mitigate latecomer stigma have contributed to geopolitical stigma, and some host government responses to geopolitical stigma replicate practices they often criticized as unfair.