Stakeholder Legitimacy

Business Ethics Quarterly, Vol. 13, No. 1, pp. 25-41

Posted: 8 Feb 2005

See all articles by Robert A. Phillips

Robert A. Phillips

York University - Schulich School of Business

Abstract

This paper is a preliminary attempt to better understand the concept of legitimacy in stakeholder theory. The normative component of stakeholder theory plays a central role in the concept of legitimacy, therefore, though the elaboration of legitimacy contained herein applies generally to all "normative cores" this paper relies on Phillips' principle of stakeholder fairness and therefore begins with a brief description of this work. This is followed by a discussion of the importance of legitimacy to stakeholder theory as well as the general ambiguity of the term. A distinction is then drawn between normative and derivative legitimacy. Reference to this distinction helps distinguish between a relationship with the organization based on direct moral obligation and one based on the power to help or harm the organization. It is concluded that stakeholders that retain the ability to affect the organization are legitimate (derivatively), but that this legitimacy is derived from the moral obligation owed other (normative) stakeholders and that the two sorts of legitimacy are importantly different from one another. An example of the normative/derivative distinction at work in managerial decision-making is elaborated upon and managerial and research implications are then suggested.

Keywords: Stakeholder theory, ethics, legitimacy

Suggested Citation

Phillips, Robert A., Stakeholder Legitimacy. Business Ethics Quarterly, Vol. 13, No. 1, pp. 25-41, Available at SSRN: https://ssrn.com/abstract=663705

Robert A. Phillips (Contact Author)

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

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