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Peter S. Hofman, Lei Li, Sunny Li Sun and Yanxue Sun

Chinese multinational enterprises (MNEs) have adopted aggressive internationalization strategies in recent years. Despite their impressive success, Chinese MNEs have encountered serious and prolonged legitimating challenges of East-meets-West. This study draws upon the stakeholder view and institutional theory to examine the linkages between stakeholder engagement and the organizational legitimacy of Chinese MNEs in Western countries. We submit that home-host country institutional distances (regulatory, cognitive and normative) underscore stakeholder engagement deficiencies of and local distrust toward Chinese MNEs which in turn are detrimental to their establishment of organizational legitimacy in Western host countries. By distinguishing between sub-national and national legitimacy, we reveal the differential effects of some intervening remedies such as isomorphism and stakeholder negotiation adopted by the Chinese MNEs.