Emerging market multinational enterprises (EMNEs) face disproportionate legitimacy challenges in the global arena. While existing literature explores various legitimization strategies such as isomorphic local adaptation to help EMNE foreign subsidiaries to gain legitimacy, there is limited attention to the role of governing structure at the subsidiary level. We argue that to gain legitimacy, foreign subsidiary governance should feature (1) reduced internal role which prioritizes alignment between foreign subsidiaries and headquarters and global integration, and (2) strengthened external role which emphasizes foreign subsidiaries’ engagement with host economy environments and local adaptation. We investigate a sample of 100 listed foreign subsidiaries of Chinese MNEs spanning from 2005 to 2021. We find that foreign subsidiaries are more likely to gain legitimacy when there is a higher orientation toward external role in terms of a lower ratio of expatriate board directors and a non-expatriate taking the CEO position. Moreover, a higher ratio of independent board directors facilitates legitimacy attainment albeit to a lesser extent. Our study contributes to the MNE legitimation literature with important managerial implications.
