Abstract

Extant literature suggests that firms may gain legitimacy through imitation. But little known is about whom foreign multinational enterprises (MNEs) will imitate, given that they have multiple social referents: home-country peers and host-country industry competitors. Drawing upon category theory, we develop a dynamic imitation model and explicate how MNEs’ categorization process is affected by social activism, which causes the shift from self-categorization to categorical imperative. We investigate this model in the context of MNE philanthropy and propose that the social movement may delegitimize MNEs’ original self-category and change their imitation target. Using a hand-collected dataset of MNEs’ philanthropic donation for the 2008 Sichuan Earthquake in China, we find that MNEs imitate their home-country peers first but shift to host-country industry competitors after an online social movement. This is because the online social movement delegitimizes MNEs as a category and suggests host-country industry peers as the new model for comparison. Further, we find that liability of foreignness impedes whereas firm reputation facilitates an MNE’s adaptation after the online social movement. Our paper contributes to the literatures on MNEs’ imitation behavior and CSR in emerging market. We also contribute to category theory by integrating self-categorization and categorical imperative and highlighting the role of social movements.