The Role Of External Environment On Firms

1042 Words5 Pages
The influence of external environment on firms’ activities and survival has been extensively investigated over the last several years (Barkema, Bell, & Pennings, 1996; Fagre & Wells Jr, 1982; Holburn & Zelner, 2010; Kostova & Roth, 2002). In corporate governance literature, external constituents, such as, government, institutional investors, security analyst, etc. exert pressure on firms so that they act in the interest of key stakeholders. While financial stakeholders have been given more attention by scholars, non-financial stakeholders have received relatively less attention. Although firms have been under increasing media scrutiny in recent years, the role of media in influencing the legitimacy of multinational firms in emerging economies has been understudied. This paper addresses how news media affects MNE performance in the host country by influencing subsidiary managers’ ties with host country business and political environments. Scholars have been attempting to unearth the effects of media on the public for quite a few years. Researchers have recognized that the effects of media are distinctive and indirect. The media has been so influential in the recent year that it can influence people about what to think (Wanta, Golan, & Lee, 2004). According to McCombs and Shaw (1972), the most important influence of media is the agenda setting perspective about issues that are deemed most important. Therefore, media campaigns that are properly designed can change the
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