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3.1 Legitimacy

A range of potentially competing Discourses exist as organizations decide how to act (or not) around issues such as resource degradation, pollution, carbon emissions, and climate change. How an organization decides to position itself strategically around such issues has implications for that organization's legitimacy in the eyes of society and its key stakeholders. Sometimes organizations develop sustainability initiatives to gain or maintain legitimacy (Emtairah and Mont 2008).

In his discussion of how 30 of the world's largest corporations address climate change, Ihlen (2009) reviewed the legitimacy literature. Legitimacy is defined as “a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions” (Suchman 1995, p. 574). Three broad types of legitimacy exist: pragmatic legitimacy, moral legitimacy, and cognitive legitimacy. Stakeholders accord organizations with pragmatic legitimacy when they envision an organization's actions will benefit them personally. Moral legitimacy involves assessments of whether or not an organization's actions are the right thing to do and contribute to societal welfare. Cognitive legitimacy focuses on whether or not an organization's actions are seen as understandable. Is it utilizing socially accepted techniques and processes? How is the organization structured? Are its leaders credible and charismatic?

Organizations rely on an implied social contract that if they will undertake socially desired actions, key stakeholders will support their goals and continued existence. A legitimacy gap exists when society expects something from an organization that it can or will not deliver (Ihlen 2009), and this can present a threat for the organization (Dowling and Pfeffer 1975) (e.g., a loss in clients, customers, or donors, government sanctions, citizen protests, difficulty attracting employees). If an organization can manage the legitimacy gap, it can maintain maximum discretionary control over its internal decision-making and external practices. Some organizations depart from societal expectations without suffering the loss of legitimacy if their actions go unnoticed or if there is no public disapproval. But to do so is a risk. Sethi (1979) proposed legitimacy-gap theory to explain this gap, generating two scenarios. In the first, the organization's behavior is knowingly inappropriate. Perhaps its behavior changed or the problematic behavior had been hidden. In the second, society's norms or expectations changed.

Societal expectations for a business organization's behaviors have changed over

time. Initially, maximizing shareholder profits was of primary value. Later, as laws (e.g., environmental, occupational safety, and health) were passed, the expectations changed. In the early 1970s, with the emergence of environmental concern among citizens of industrialized societies, business organizations faced an identity crisis. Many went from being seen as the provider of jobs, income, and prosperity to being seen as the destroyers of the natural environment and of peoples' health (Emtairah and Mont 2008). Today, the public generally expects Western for-profit and public organizations to proactively manage their impact on the natural world and treat their employees and surrounding communities better than is legally prescribed (Domenec 2012). In order to maintain the social license to operate whereby organizations have access to public support and resources, and in the case of for-profit organizations, access to markets, management engages in and seeks to communicate their organization's engagement in corporate social responsibility (CSR) activities (Emtairah and Mont 2008).

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