Legitimacy Strategies in a Globalized World: Organizing for Complex and Heterogeneous Environments

Abstract

Corporate legitimacy can be understood as the social acceptance of a corporation and its behaviour. The social and environmental side effects of the production, distribution, and consumption of goods and services increasingly create legitimacy problems for corporations, which now occupy centre stage in the debate on sustainable development. Corporate legitimacy is vital to the survival of corporations in competitive environments. The literature distinguishes three strategies that corporations commonly employ to address legitimacy problems: adapt to external expectations, try to manipulate the perception of their stakeholders or engage in a discourse with those who question their legitimacy. This paper investigates when and how corporations should apply these different strategies, a question that has so far been largely neglected. We suggest that corporations have to activate all three legitimacy strategies, despite their inherent incompatibilities. Discussing the legitimacy challenges corporations face with relation to sustainable development, we will develop a theoretical framework for three legitimacy strategies and their organizational prerequisites.

Keywords: Globalization, Institutional Theory, Legitimacy, Paradox, Sustainability