The institutional concept of legitimacy is offered as the cornerstone for analyzing the appropriateness of foreign manufacturing entities in emerging economies. After an introductory discussion about economic development and dependency theory, the dominant writings of global business strategy are reviewed and then linked to major institutional frameworks found in economics and sociology and shown to be the source of normative legitimacy for business globalization. However, both the writings and the frameworks limit themselves to developed-economy orthodoxy, i.e. firm performance instead of economic development. This myopic perspective ignores the growing discontent with globalization and lends itself to the institutional charge of illegitimacy. In particular, it ignores the prevailing condition of neo-dependency found in MNC manufacturing subsidiaries within emerging economies and neglects the broader societal concern for national economic development. Given the multiple levels and perspectives for institutions and their legitimacy, our reviews reveal that MNCs with emerging-economy subsidiaries operate with 'narrow' institutionalized legitimacy (labeled organizational legitimacy). But at the societal level, where legitimacy is 'broad' (labeled societal legitimacy), MNCs suffer a legitimacy deficit due to the dilemma presented by neo-dependency. With findings from a study of maquiladora plants in Mexico reflecting MNC operations at the micro level, a hypothesis indicative of neo-dependency is tested. Finally, an augmented institutional framework is proposed that allows for a more inclusive model of global business strategy with a broader perspective on legitimacy.